Economics · Fiscal Policy
A government decides to implement a 'Counter-Cyclical Fiscal Policy' during a period of extreme economic overheating and high inflation. Which specific combination of actions would be most appropriate under this framework?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Selling government equity in public sector banks to fund a new universal basic income scheme.
- 2Increasing the fiscal deficit target to stimulate rural demand.
- 3Increasing the corporate tax rate and reducing public expenditure on non-essential infrastructure.✓
- 4Decreasing personal income tax rates and increasing subsidies for fuel.
Correct answer
Increasing the corporate tax rate and reducing public expenditure on non-essential infrastructure.
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