Ques. Which among the following steps is most likely to be taken at the time of an economic recession? (2021)
A.Cut in tax rates accompanied by 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
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Answer: B
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Explanation:
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Option (b) is correct: A recession is a significant, widespread, and prolonged downturn in economic activity. A popular rule of thumb is that two consecutive quarters of decline in the gross domestic product (GDP) constitute a recession. Recessions typically produce declines in economic output, consumer demand, and employment.
The recession can be countered by increasing the money supply for investment in the market.
An increase in expenditure on public projects will eventually increase the money supply and help in countering the economic recession.
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