India's GDP Contracted 23.9% in the April - June quarter of 2020- 21 as compared to same period 2019-18 , suggesting that the lackdown has hit the economy hard." the Hindustan times ,1st September 2020. state and discuss any two fiscal measures that may be taken by the government of India to correct it he situation indicated.
Answers
Explanation:
India's GDP Contracted 23.9% in the April - June quarter of 2020- 21 as compared to same period 2019-18 , suggesting that the lackdown has hit the economy hard." the Hindustan times ,1st September 2020. state and discuss any two fiscal measures that may be taken by the government of India to correct it he situation indicated
Answer:
The situation suggests that Aggregate Demand is less than Aggregate Supply.
Following two fiscal measures may be taken to control it:
a. Decrease in Taxes - The government can decrease the tax rate . This may increase the purchasing power for the general public. This can increase the Aggregate Demand in the economy to bring it equal to the Aggregate Supply.
b. Increase in Government Expenditure - The government can also increase its expenditure. This may increase the purchasing power for the general public, which in turn may increase the Aggregate Demand in the economy to bring it equal to the Aggregate Supply.