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Question :  The government's policy of reducing taxes to stimulate economic growth is known as ____________.

Option 1: Austerity measures

Option 2: Expansionary fiscal policy 

Option 3: Contractionary fiscal policy

 

Option 4: Supply-side economics


Team Careers360 15th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: Expansionary fiscal policy


Solution : The correct answer is (B) Expansionary fiscal policy.

Expansionary fiscal policy refers to the government's use of increased government spending and/or decreased taxation to stimulate economic growth and aggregate demand. By reducing taxes, the government puts more money into the hands of individuals and businesses, which can lead to increased consumer spending and investment. This, in turn, can boost economic activity and promote growth.

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