Fiscal Policy Tools — Prelims Questions

Which of the following is NOT considered an automatic stabilizer in fiscal policy?

Consider the following statements regarding the Fiscal Responsibility and Budget Management (FRBM) Act, 2003: 1. It mandates the Central Government to eliminate the revenue deficit. 2. It prohibits the Central Government from borrowing from the Reserve Bank of India (RBI) except under certain specified circumstances. 3. It aims to achieve a fiscal deficit target of 3% of GDP in the medium term. Which of the statements given above are correct?

Which of the following constitutional articles primarily deals with the borrowing powers of the Union Government?

Consider the following statements regarding capital expenditure: 1. It creates physical or financial assets for the government. 2. It has a higher multiplier effect on the economy compared to revenue expenditure. 3. Interest payments on government debt are a part of capital expenditure. Which of the statements given above are correct?

Which of the following fiscal policy tools would be most appropriate to combat a severe economic recession characterized by low demand and high unemployment?