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Which of the following government actions can be used as remedy for the “recession”
phase of the business cycle?
1. Cut in the direct and indirect taxes.
2. Slashing interest rate and liberalizing the lending procedures.
3. Upward revision of salaries and wages.
phase of the business cycle?
1. Cut in the direct and indirect taxes.
2. Slashing interest rate and liberalizing the lending procedures.
3. Upward revision of salaries and wages.
Select the correct code from below.
- a)1 and 2 only
- b)1 and 3 only
- c)2 and 3 only
- d)1, 2 and 3
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Which of the following government actions can be used as remedy for th...
What may a government do to rescue the economy from the phase of recession? The usualremedies are given below:
(i) Direct and indirect taxes should be cut down, so that the consumers have higher disposableincomes (income after paying direct tax i.e. income tax) on the one hand and the goods shouldbecome cheaper on the other hand thus there is hope that the demand might pick up.
(ii) The burden of direct tax, specially the income tax, divdend tax, interest tax are slashed toenhance the disposable income (i.e income after direct tax payment)—
(iii) Salaries and wages should be revised by the government to encourage general spendingby the consumers (as the Government of India implemented the recommendations of the fifthpay commission without much deliberation in 1996–97).
(iv) Indirect taxes such as custom duty, excise duty (cenvat), sales tax, etc. should be cut downso that produced goods reach the market at cheaper prices.
(v) The government usually goes on to follow a cheap money supply policy by slashing down theinterest rates across the board and the lending procedure is also liberalised.
(vi) Tax breaks are announced for new investments in the productive areas. etc.
Most Upvoted Answer
Which of the following government actions can be used as remedy for th...
Government actions to remedy the recession phase of the business cycle include:
1. Cut in direct and indirect taxes:
- One of the ways the government can stimulate economic activity during a recession is by reducing taxes. Lower taxes increase disposable income for individuals and businesses, which can lead to increased spending and investment.
- By cutting direct taxes such as income tax and indirect taxes like sales tax or goods and services tax (GST), the government can incentivize consumption and boost demand for goods and services.
- This increased demand can help businesses generate more revenue, which can then lead to increased hiring and investment.
2. Slashing interest rates and liberalizing lending procedures:
- Another measure the government can take to combat a recession is to lower interest rates. This helps to reduce the cost of borrowing for individuals and businesses, making it cheaper to take out loans for various purposes.
- Lower interest rates encourage borrowing and investment, as businesses are more likely to invest in new projects when the cost of borrowing is low. Similarly, individuals may be more inclined to take out loans for purchases such as homes or cars.
- Additionally, liberalizing lending procedures can make it easier for individuals and businesses to access credit. This can help stimulate economic activity by providing easier access to capital for investment and spending.
3. Upward revision of salaries and wages:
- Increasing salaries and wages can have a positive impact on consumer spending. When individuals receive higher incomes, they are likely to spend more, which can stimulate demand for goods and services.
- Increased wages also improve the standard of living for individuals and can help alleviate financial stress during a recession.
- Higher wages can also lead to increased productivity and job satisfaction, as employees may feel more motivated and valued, which can ultimately benefit businesses.
In conclusion, all three government actions - cutting direct and indirect taxes, slashing interest rates and liberalizing lending procedures, and upward revision of salaries and wages - can be effective remedies for the recession phase of the business cycle. These measures aim to boost consumption, investment, and overall economic activity, which can help mitigate the negative effects of a recession.
1. Cut in direct and indirect taxes:
- One of the ways the government can stimulate economic activity during a recession is by reducing taxes. Lower taxes increase disposable income for individuals and businesses, which can lead to increased spending and investment.
- By cutting direct taxes such as income tax and indirect taxes like sales tax or goods and services tax (GST), the government can incentivize consumption and boost demand for goods and services.
- This increased demand can help businesses generate more revenue, which can then lead to increased hiring and investment.
2. Slashing interest rates and liberalizing lending procedures:
- Another measure the government can take to combat a recession is to lower interest rates. This helps to reduce the cost of borrowing for individuals and businesses, making it cheaper to take out loans for various purposes.
- Lower interest rates encourage borrowing and investment, as businesses are more likely to invest in new projects when the cost of borrowing is low. Similarly, individuals may be more inclined to take out loans for purchases such as homes or cars.
- Additionally, liberalizing lending procedures can make it easier for individuals and businesses to access credit. This can help stimulate economic activity by providing easier access to capital for investment and spending.
3. Upward revision of salaries and wages:
- Increasing salaries and wages can have a positive impact on consumer spending. When individuals receive higher incomes, they are likely to spend more, which can stimulate demand for goods and services.
- Increased wages also improve the standard of living for individuals and can help alleviate financial stress during a recession.
- Higher wages can also lead to increased productivity and job satisfaction, as employees may feel more motivated and valued, which can ultimately benefit businesses.
In conclusion, all three government actions - cutting direct and indirect taxes, slashing interest rates and liberalizing lending procedures, and upward revision of salaries and wages - can be effective remedies for the recession phase of the business cycle. These measures aim to boost consumption, investment, and overall economic activity, which can help mitigate the negative effects of a recession.
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Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer?
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Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer?.
Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer?.
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Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer?, a detailed solution for Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of Which of the following government actions can be used as remedy for the “recession”phase of the business cycle?1. Cut in the direct and indirect taxes.2. Slashing interest rate and liberalizing the lending procedures.3. Upward revision of salaries and wages.Select the correct code from below.a)1 and 2 onlyb)1 and 3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
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