Economics · Fiscal Policy
Consider the following statements regarding fiscal consolidation: Statement I: Fiscal consolidation involves reducing fiscal deficits and public debt by improving revenue generation and rationalizing government expenditures. Statement II: A reduction in fiscal deficit invariably leads to higher economic growth. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect, but Statement II is correct
- 2Statement I is correct, but Statement II is incorrect✓
- 3Both Statement I and Statement II are correct, but Statement II is not the correct explanation for Statement I
- 4Both Statement I and Statement II are correct, and Statement II is the correct explanation for Statement I
Correct answer
Statement I is correct, but Statement II is incorrect
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