Explanation
- A
Cut in tax rates accompanied by increase in interest rate
Cut taxes and raise rates. Fiscal ease plus monetary tightness fight each other; rates up is not a recession pack.
- B
Increase in expenditure on public projects
Increase expenditure on public projects. Classic Keynesian stimulus in a slump.
- C
Increase in tax rates accompanied by reduction of interest rate.
Raise taxes and cut rates. Tax rise is contractionary.
- D
Reduction of expenditure on public projects
Cut public projects. That deepens a recession.
Summary. Official key is (b). In a recession the usual first fiscal move is more public spending (and often easier money). Raising rates or taxes, or cutting projects, is the wrong direction.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
-
2023 · Q88 · General Studies · 2 marks
Consider the following statements : Statement-I : India accounts for 3.2% of global export of goods. Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India's 'Production-linked Incentive' scheme. Which one of the following is correct in respect of the above statements? -
2016 · Q3 · General Studies · 2 marks
There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty Select the correct answer using the code given below -
2016 · Q29 · General Studies · 2 marks
The term 'Core Banking Solution' is sometimes seen in the news. Which of the following statements best describes/describe this term? 1. It is a networking of a bank's branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts. 2. It is an effort to increase RBI's control over commercial banks through computerization. 3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank. Select the correct answer using the code given below -
2015 · Q98 · General Studies · 2 marks
There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Expanding industries Select the correct answer using the code given below