If a government increases spending and cuts taxes to fight recession, this is:

CA Foundation · Business Economics · MTP · May 2026
If a government increases spending and cuts taxes to fight recession, this is:
(A) A. Contractionary fiscal policy
(B) B. Expansionary fiscal policy
(C) C. Neutral policy
(D) D. Regulatory policy

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Expansionary fiscal policy

Topics: Public Finance

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