{"id":91851,"date":"2025-06-01T11:07:49","date_gmt":"2025-06-01T11:07:49","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91851"},"modified":"2025-06-01T11:07:49","modified_gmt":"2025-06-01T11:07:49","slug":"which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time\/","title":{"rendered":"Which among the following steps is most likely to be taken at the time"},"content":{"rendered":"

Which among the following steps is most likely to be taken at the time of an economic recession?<\/p>\n

[amp_mcq option1=”Cut in tax rates accompanied by increase in interest rate” option2=”Increase in expenditure on public projects” option3=”Increase in tax rates accompanied by reduction of interest rate” option4=”Reduction of expenditure on public projects” correct=”option2″]<\/p>\n

\n
\n
This question was previously asked in<\/div>\n
UPSC IAS – 2021<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
\nThe correct option is B. Increasing expenditure on public projects is an expansionary fiscal policy typically used to stimulate the economy during a recession.
\n<\/section>\n
\n– During an economic recession, there is a decrease in aggregate demand. Governments employ expansionary policies to boost demand.
\n– Increasing expenditure on public projects (like infrastructure) directly injects money into the economy, creates jobs, increases income, and stimulates further spending through the multiplier effect. This is an expansionary fiscal policy.
\n– Cutting tax rates is also an expansionary fiscal policy, as it increases disposable income, potentially leading to increased consumption and investment. Increasing tax rates is contractionary.
\n– Reducing interest rates is an expansionary monetary policy aimed at making borrowing cheaper to encourage investment and consumption. Increasing interest rates is contractionary.
\n– To combat a recession, expansionary policies are needed. Options A, C, and D involve either contractionary elements or exclusively contractionary policies (D). Option B is a clear expansionary fiscal policy.
\n<\/section>\n
\nTypical counter-cyclical measures during a recession include increasing government spending (fiscal stimulus) and lowering interest rates (monetary stimulus).
\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Which among the following steps is most likely to be taken at the time of an economic recession? [amp_mcq option1=”Cut in tax rates accompanied by increase in interest rate” option2=”Increase in expenditure on public projects” option3=”Increase in tax rates accompanied by reduction of interest rate” option4=”Reduction of expenditure on public projects” correct=”option2″] This question was … <\/p>\n

Detailed SolutionWhich among the following steps is most likely to be taken at the time<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1092],"tags":[1110,1120,1196],"class_list":["post-91851","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1110","tag-economic-development","tag-fiscal-policy-revenue","no-featured-image-padding"],"yoast_head":"\nWhich among the following steps is most likely to be taken at the time<\/title>\n<meta name=\"description\" content=\"The correct option is B. Increasing expenditure on public projects is an expansionary fiscal policy typically used to stimulate the economy during a recession. - During an economic recession, there is a decrease in aggregate demand. Governments employ expansionary policies to boost demand. - Increasing expenditure on public projects (like infrastructure) directly injects money into the economy, creates jobs, increases income, and stimulates further spending through the multiplier effect. This is an expansionary fiscal policy. - Cutting tax rates is also an expansionary fiscal policy, as it increases disposable income, potentially leading to increased consumption and investment. Increasing tax rates is contractionary. - Reducing interest rates is an expansionary monetary policy aimed at making borrowing cheaper to encourage investment and consumption. Increasing interest rates is contractionary. - To combat a recession, expansionary policies are needed. Options A, C, and D involve either contractionary elements or exclusively contractionary policies (D). Option B is a clear expansionary fiscal policy.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Which among the following steps is most likely to be taken at the time\" \/>\n<meta property=\"og:description\" content=\"The correct option is B. Increasing expenditure on public projects is an expansionary fiscal policy typically used to stimulate the economy during a recession. - During an economic recession, there is a decrease in aggregate demand. Governments employ expansionary policies to boost demand. - Increasing expenditure on public projects (like infrastructure) directly injects money into the economy, creates jobs, increases income, and stimulates further spending through the multiplier effect. This is an expansionary fiscal policy. - Cutting tax rates is also an expansionary fiscal policy, as it increases disposable income, potentially leading to increased consumption and investment. Increasing tax rates is contractionary. - Reducing interest rates is an expansionary monetary policy aimed at making borrowing cheaper to encourage investment and consumption. Increasing interest rates is contractionary. - To combat a recession, expansionary policies are needed. Options A, C, and D involve either contractionary elements or exclusively contractionary policies (D). Option B is a clear expansionary fiscal policy.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T11:07:49+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Which among the following steps is most likely to be taken at the time","description":"The correct option is B. Increasing expenditure on public projects is an expansionary fiscal policy typically used to stimulate the economy during a recession. - During an economic recession, there is a decrease in aggregate demand. Governments employ expansionary policies to boost demand. - Increasing expenditure on public projects (like infrastructure) directly injects money into the economy, creates jobs, increases income, and stimulates further spending through the multiplier effect. This is an expansionary fiscal policy. - Cutting tax rates is also an expansionary fiscal policy, as it increases disposable income, potentially leading to increased consumption and investment. Increasing tax rates is contractionary. - Reducing interest rates is an expansionary monetary policy aimed at making borrowing cheaper to encourage investment and consumption. Increasing interest rates is contractionary. - To combat a recession, expansionary policies are needed. 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Option B is a clear expansionary fiscal policy.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T11:07:49+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time\/","url":"https:\/\/exam.pscnotes.com\/mcq\/which-among-the-following-steps-is-most-likely-to-be-taken-at-the-time\/","name":"Which among the following steps is most likely to be taken at the time","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T11:07:49+00:00","dateModified":"2025-06-01T11:07:49+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"The correct option is B. 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Options A, C, and D involve either contractionary elements or exclusively contractionary policies (D). 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