ECONOMICS (CBSE/UGC NET)

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ECONOMICS

FISCAL POLICY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
“Observers ____ speculate what may happen to the American economy if lawmakers implement similar austerity measures to tackle the deficit quickly. Many economists ____ have instead said officials need to get the economy on a long-term sustainable path without cutting too much in the short term and putting the economy back in a ditch.”
A
Monetary Policy
B
Fiscal Policy
C
Both Monetary and Fiscal Policy
D
None of the above
Explanation: 

Detailed explanation-1: -It usually results in cutting non-essential programs. This includes cutting or freezing the wages of government employees, cutting back on government programs, such as programs for veterans, people experiencing homelessness, and national parks, a freeze on hiring, and a freeze on pensions.

Detailed explanation-2: -austerity, also called austerity measures, a set of economic policies, usually consisting of tax increases, spending cuts, or a combination of the two, used by governments to reduce budget deficits.

Detailed explanation-3: -There are three primary types of austerity measures: revenue generation (higher taxes) to fund spending, raising taxes while cutting nonessential government functions, and lower taxes and lower government spending.

Detailed explanation-4: -Labor is the human effort that can be applied to the production of goods and services. Labor’s contribution to an economy’s output of goods and services can be increased either by increasing the quantity of labor or by increasing human capital.

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