Question
GSEasyPrelims 2011Economy

Which one of the following statements appropriately describes the “fiscal stimulus”?

Explanation

A fiscal stimulus refers to a set of policy measures—specifically increased government spending or tax cuts—designed to "kickstart" a sluggish economy.

  • Why (B) is correct: It describes the government taking proactive ("affirmative") steps to increase the total demand in the economy, thereby boosting overall economic activity.

  • Why others are incorrect: (A) focuses only on the manufacturing sector, whereas stimulus is broad-based.

  • (C) describes a targeted credit policy or monetary intervention, not a broad fiscal one.

  • (D) refers to "Financial Inclusion" (bringing the unbanked into the formal system), which is a long-term structural goal, not a short-term stimulus.

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