To stimulate economic growth in an economy that is in a recession, the most appropriate fiscal policy from the options listed is cutting taxes.
Cutting taxes can increase disposable income for consumers and businesses, leading to higher spending and investment. This can help stimulate demand in the economy, which is crucial for recovery during a recession.
Here's a brief analysis of the other options:
- Cutting government spending: This would likely reduce overall demand in the economy, which can exacerbate a recession rather than help it.
- Promoting a new trade agreement: While this can have long-term benefits for growth, it typically does not have immediate effects on a recession.
- Increasing worker productivity: While essential for long-term economic growth, increasing productivity does not directly act as a fiscal policy and may not have immediate effects in a recession.
Therefore, cutting taxes is the most direct fiscal policy aimed at stimulating economic growth during a recession from the provided options.