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UPSC 2021: The Governor of the RBI draws his power from the RBI Act. Which of the above statements are correct?
(a)1 and 2 only
(b)2 and 3 only
(c)1 and 3 only
(d)1,2 and 3
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Not attemptedCorrect Answer: (b) 2 and 3 only
Keynesian policy recommends an expansionary fiscal stance in a recession; governments typically increase expenditure on public works to boost aggregate demand—a practice often termed ‘pump-priming’. Raising taxes or cutting public spending would aggravate the downturn, while hiking interest rates would dampen investment. Hence option (b) is the measure most likely to be taken. ([investopedia.com](https://www.investopedia.com/terms/p/pump-priming.asp?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2021 Indian Economy question?▼
The correct answer is option (b): 2 and 3 only. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Fiscal Policy & Budget question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2021, GS Paper 1, as Question 3. It falls under Indian Economy > Fiscal Policy & Budget.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
How many UPSC Prelims questions have been asked from Fiscal Policy & Budget?▼
UPSC has asked 44 questions from Fiscal Policy & Budget (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.