Consider the following actions by the Government 1 Cutting the tax rates 2 Increasing the government...........

Economic Affairs Tax System

Consider the following actions by the Government

1. Cutting the tax rates

2. Increasing the government spending

3. Abolishing the subsidies

In the context of economic recession which of the above actions can be considered a part of the ‘fiscal stimulus’ package?

1 and 2 Only

2 Only

1 and 3 Only

All of these

A stimulus package is a package of economic measures put together by the government to stimulate a floundering economy.
The objective of a stimulus package is to reinvigorate the economy and prevent or reverse a recession by boosting employment and spending.
The theory behind the usefulness of a stimulus package is rooted in Keynesian economics, which argues that the impact of a recession can be lessened with increased government spending.