Here is Question No. 53 a part of our series on UPSC Prelims 2021.
Q53. Which among the following steps is most likely to be taken at the time of an economic recession?
a) Cut in tax rates accompanied by an increase in interest rate
b) Increase in expenditure on public projects
c) Increase in tax rates accompanied by reduction of interest rate
d) Reduction of expenditure on public projects
Answer: (b)
- Recession- It is a situation which is characterized by the negative growth rate of GDP in two successive quarters. Some of the indicators of a recession include a slowdown in the economy, a fall in investments, fall in the output of the economy, etc. In an Economic Recession, the Government can:
- Decrease interest rate to make more room for borrowing Increase Government Spending Cut Tax rates to increase the spending capacity of people Private investors are incapable of making massive investments on various infrastructural projects like road-bridge-dam construction, power plants, transport and communications, etc. It is imperative that the government undertakes such projects. The greater the public expenditure, the higher is the level of economic development.
For UPSC Prelims Resources, Click here
For Daily Updates and Study Material:
Join our Telegram Channel – Edukemy for IAS
- 1. Learn through Videos – here
- 2. Be Exam Ready by Practicing Daily MCQs – here
- 3. Daily Newsletter – Get all your Current Affairs Covered – here
- 4. Mains Answer Writing Practice – here
Visit our YouTube Channel – here
