Economy, Fiscal Policy, UPSC PYQ

1

Which among the following steps is most likely to be taken at the time of an economic recession?

Cut in tax rates accompanied by increase in interest rate.

Increase in expenditure on public projects.

Increase in tax rates accompanied by reduction of interest rate

Reduction of expenditure on public projects

2

Which one of the following is likely to be the most inflationary in its effects?

Repayment of public debt

Borrowing from the public to finance a budget deficit

Borrowing from the banks to finance a budget deficit

Creation of new money to finance a budget deficit

3

Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?

Diversion of resources to the purchase of real estate and investment in luxury housing

Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.

Large donations to political parties and growth of regionalism

Loss of revenue to the State Exchequer due to tax evasion.