Decrease in government spending
Expansionary Fiscal Policy Characteristics
Expansionary fiscal policy aims to stimulate economic activity by increasing aggregate demand. It is typically used during economic downturns or recessions.
Tools of Expansionary Fiscal Policy
Key measures include:
- Increased Government Spending: Direct injection of funds into the economy (e.g., infrastructure projects, social programs).
- Decreased Taxes: Reducing personal income taxes leaves consumers with more disposable income, potentially boosting consumption. Reducing business taxes can encourage investment and hiring.
Identifying Non-Expansionary Measures
The question asks for a characteristic that does NOT define expansionary fiscal policy. Let's analyze the options:
- Decrease in personal taxes: This increases disposable income, stimulating demand. It IS expansionary.
- Increase in government spending: This directly boosts aggregate demand. It IS expansionary.
- Decrease in government spending: This reduces aggregate demand and slows the economy. It is contractionary, NOT expansionary.
- Decrease in business taxes: This encourages business investment and potentially increases hiring and wages, stimulating demand. It IS expansionary.
Conclusion
A decrease in government spending runs counter to the goals of expansionary fiscal policy. Therefore, it is NOT characterized by this measure.
Similar Questions
- What was the main rationale for the policy of import substitution during the first seven Five Year Plans?
- Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion (A): In macroeconomics, treating a single commodity as representative of all goods allows simplification of aggregate analysis.
Reason (R): This is because all individual goods always behave identically under inflationary trends. - What was the primary aim of import substitution policy in India’s early planning era?
- Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion (A): GDP doesn’t really tell the whole story when it comes to how well people in a country are actually doing.
Reason (R): That’s mainly because it doesn’t take into account stuff like wear and tear of machines, pollution, or even how the money is divided among people. - The term 'Navratnas' in public sector reform refers to:
- What was a key equity-based goal of land reforms implemented after independence?
- Economic reforms in India were introduced in which year?
- Which of the following is an example of a capital receipt?
- How does Indian planning demonstrate responsiveness to feedback?
- What does "P" in LPG reforms stand for?
Important Questions from Economy
The Five Year Plan was first launched in
Which of the following was/were the feature(s) of Lenin’s New Economic Policy (NEP) for the Soviet Union?
1) Private retail trading was strictly forbidden
2) Private enterprise was strictly forbidden
3) Peasants were not allowed to sell their surplus
4) To secure liquid capital, concessions were allowed to foreign capitalists, but the State retained the option of purchasing the product of such concerns
Select the correct answer using the code given below:
Which one of the following was set as a target of average growth of GDP of India over the plan period 2012-2017 by the Approach Paper to the Twelfth Five year Plan?
In ________ economies, all productive resources are owned and controlled by the government.
Private ownership of the means of production is a feature of a _______ economy.
