Question

Which of the following best describes counter-cyclical fiscal policy?

• A. The deployment of active monetary policy to reduce high levels of inflation in the economy.
• B. The increases in GDP resultant from rising business and consumer confidence
• C. The use of active fiscal policy to counter economic downturns and restore the economy to more normal levels of demand.
• D. The contraction of government spending to reduce budget deficits and reduce the national debt.

Answer 1

The correct option is C

The use of active fiscal policy to counter economic downturns and restore the economy to more normal levels of demand.

The use of active fiscal policy to counter economic downturns and restore the economy to more normal levels of demand refers to a countercyclical fiscal policy.