UPSC Prelims 2011·GS1·economy·public finance

Which one of the following statements appropriately describes the "fiscal stimulus"?

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Last updated 23 May 2026, 3:31 pm IST
  1. AIt is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth
  2. BIt is an intense affirmative action of the Government to boost economic activity in the countryCorrect
  3. CIt is Government's intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation
  4. DIt is an extreme affirmative action by the Government to pursue its policy of financial inclusion

Explanation

The correct answer is B because a fiscal stimulus refers to a set of measures taken by the government, such as increasing public spending or reducing taxes, to boost economic activity during a slowdown or recession. It is a tool used to increase aggregate demand and stimulate growth when private consumption and investment are low. While options A, C, and D describe specific government interventions in manufacturing, agriculture, or financial inclusion, they do not capture the broad definition of a fiscal stimulus, which is an overall push to revive the entire economy through government expenditure and tax policy.
economy: Which one of the following statements appropriately describes the "fiscal stimulus"?
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