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2021 · Q3Indian EconomyFiscal Policy & Budgeteasy

Which among the following steps is most likely to be taken at the time of an economic recession?

  1. (a)Cut in tax rates accompanied by increase in interest rate
  2. (b)Increase in expenditure on public projects
  3. (c)Increase in tax rates accompanied by reduction of interest rate
  4. (d)Reduction of expenditure on public projects
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Official answer(b) Increase in expenditure on public projects

2026 · Q59Indian EconomyFiscal Policy & Budgetmoderate

Which one of the following best describes the ‘Crowding Out Effect’ in the context of fiscal policy ?

  1. (a)A situation where private investment increases due to increased Government spending
  2. (b)A situation where Government borrowing leads to higher interest rates, which reduces private investment
  3. (c)A situation where an increase in taxes leads to increased private sector investment
  4. (d)A situation where Government spending has no impact on aggregate demand
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Official answer(b) A situation where Government borrowing leads to higher interest rates, which reduces private investment

2025 · Q66Indian EconomyFiscal Policy & Budgetmoderate

Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct? I. It has recommended grants of ₹ 4,800 crores from the year 2022–23 to the year 2025–26 for incentivizing States to enhance educational outcomes. II. 45% of the net proceeds of Union taxes are to be shared with States. III. ₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms. IV. It reintroduced tax effort criteria to reward fiscal performance. Select the correct answer using the code given below.

  1. (a)I, II and III
  2. (b)I, II and IV
  3. (c)I, III and IV
  4. (d)II, III and IV
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Official answer(c) I, III and IV

2023 · Q89Indian EconomyFiscal Policy & Budgetmoderate

Consider the following statements : The 'Stability and Growth Pact' of the European Union is a treaty that 1. limits the levels of the budgetary deficit of the countries of the European Union 2. makes the countries of the European Union to share their infrastructure facilities 3. enables the countries of the European Union to share their technologies How many of the above statements are correct?

  1. (a)Only one
  2. (b)Only two
  3. (c)All three
  4. (d)None
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Official answer(a) Only one