The real GDP growth to be negative for the year 2020-21 as a whole. Which of the following is a fiscal measure that may be taken by the Government of India to correct the Covid-19 pandemic?
(a) Cut in Repo Rate by the RBI.
(b) Decrease the taxes.
(c) Increase in public expenditure.
(d)Both (b) and (e)
Answers
Answer:
D is the answer
because by increasing in taxes demand will increase
and by increasing public expenditure demand will increase again which will lead to increase in real gdp
Real GDP growth
Explanation
(c) Increase in public expenditure
By doing this activity:
- Demand will rise.
When demand will rise there will be increase in expenses because people will be more anxious to go the things which they are not able to buy with their previous salary.
- Capacity to work.
When people will see increase in their income they will work more in order to earn more because they know that if they work with more efficiency then they will get some increase in their earnings.
- Income will rise.
People will notice the rise in their income because the government is increasing the expenditure.
- Local expenses will rise.
When people income will rise than all will tend to buy all those possible things which they were unable to before.
- Savings will rise.
After seeing the rise in income everyone will want to save more and more for their future plannings.
- Proper utilisation of resources.
The resources which are made for the local usage only will be utilised more as compared to before.
- Desires will increase.
Seeing increase in income desires will increase to buy more and more of comfortable things.
- Employment will increase.
More people will get employment to earn their livelihood.