PRC-3 · Chapter 16 · Question 8 of 20
During a severe economic crash, the Ministry of Finance significantly reduces income taxes and spends billions building public railways to create jobs. What is this macroeconomic intervention called?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Expansionary fiscal policy
Explanation
Fiscal policy involves government taxation and spending. Cutting taxes and increasing spending to stimulate a depressed economy is 'expansionary' fiscal policy.
More Public Finance MCQs
- Q10A defining feature of a 'Direct Tax', such as personal income tax, is that:
- Q11A government introduces an income tax where low-income earners pay 5% and wealthy executives pay 40%. This system, which satisfies the…
- Q12If a government imposes a fixed Rs. 100 tax on every citizen regardless of whether they earn Rs. 10,000 or Rs. 10 million, this tax takes…
- Q13Adam Smith's 'Canon of Certainty' regarding taxation dictates that:
- Q14Which of the following is the defining characteristic of a 'Direct Tax' (like Corporate Tax)?