With a view to correcting deflationary gap or deficient demand which of the following fiscal policy ...........

With a view to correcting deflationary gap or deficient demand, which of the following fiscal policy measures should be adopted ?

Reduction in taxes

Increase in public expenditure

Reduction in public debt

All of these

- To tackle a deflationary gap or deficient demand, the aim is to boost overall demand in the economy.

- Reduction in taxes: This leaves more disposable income with people, encouraging more spending.

- Increase in public expenditure: When the government spends more, it directly increases demand for goods and services.

- Reduction in public debt: By lowering debt repayments, the government may have more funds to spend elsewhere, raising demand.

- All these are expansionary fiscal policies designed to increase demand and close the deflationary gap.

Correct Answer: Option 4 - All of these

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