Which of the following would be an example of a counter-cyclical fiscal policy during a period of recession?

CA Foundation · Business Economics · RTP · January 2026
Which of the following would be an example of a counter-cyclical fiscal policy during a period of recession?
(A) A. Increasing taxes and reducing government spending
(B) B. Cutting taxes and increasing government expenditure
(C) C. Reducing the public debt by increasing savings
(D) D. Avoiding changes in taxes and government spending

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Cutting taxes and increasing government expenditure

Topics: Public Finance

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