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Home› UPSC CSE› Prelims GS Paper I› 2011 questions› Question 62

UPSC CSE Prelims

Subject: Economy Chapter: Fiscal Policy

2011 PYQ

Question 62

Which one of the following statements appropriately describes the "fiscal stimulus" ?

Choose one answer AIt is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth BIt is an intense affirmative action of the Government to boost economic activity in the country CIt is Government's intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation DIt is an extreme affirmative action by the Government to pursue its policy of financial inclusion

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Correct answer: B

Correct Option: B Explanation: A fiscal stimulus is an expansionary government budgetary intervention-higher spending and/or lower taxes-designed to strengthen aggregate demand and economic activity. Option-wise Analysis: A: Incorrect - Government manufacturing investment may be one measure but is not the general definition. B: Correct - active government measures to boost the economy characterise fiscal stimulus. C: Incorrect - Bank-lending instructions for agriculture are too narrow and resemble sectoral credit policy. D: Incorrect - Financial inclusion is a distinct goal and not synonymous with short-run fiscal stimulus.

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