Economics · Fiscal Policy
Consider the following statements: Statement I: A reduction in government expenditure represents a form of contractionary fiscal policy. Statement II: Such a fiscal stance is generally adopted to control inflationary pressures and reduce public debt levels. Which one of the following is correct with respect to the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 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 does not explain Statement I
- 4Both Statement I and Statement II are correct, and Statement II correctly explains Statement I✓
Correct answer
Both Statement I and Statement II are correct, and Statement II correctly explains Statement I
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Fiscal Policy MCQs →Want more practice questions on Fiscal Policy?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Fiscal Policy