Which of the following is an example of counter cyclical fiscal policy?
A) A reduction in taxes when the economy is booming.
B) An increase in government spending when the economy is booming.
C) An increase in taxes when the economy has a recessionary gap.
D) An increase in government spending when the economy has a recessionary gap.

Question

Quizplus · Accepted Answer

Counter cyclical fiscal policy aims to counteract economic fluctuations. Increasing government spending during a recessionary gap is an example of this, as it seeks to stimulate the economy by boosting demand.

Which of the Following Is an Example of Counter Cyclical