Âthe principle underlying fiscal policy suggests that when unemployment is rising and the economy is going into a recession, fiscal policy should:

When unemployment is rising and the economy is going into a recession, fiscal policy must stimulate economic activity by increasing government spending, decreasing taxes, or both

Explanation:

Fiscal policy is a policy by which a particular government must alter or modify its spending levels and adjust its tax rates to influence a nation's economy and monitor it on a regular basis.  The main motto of this policy is to make sure that the economy of people in a country is balanced and never get too low.  

But when the economy of the country falls and unemployment increases they must make take measures to stimulate economic activities by increasing the spending expenditure of the government and also by reducing the taxes applied or by doing them both.

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