Which one of the following statements appropriately describes the fiscal stimulus?

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Q: 8 (IAS/2011)
Which one of the following statements appropriately describes the “fiscal stimulus”?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,158,88,33,158,28,27

keywords: 

{'fiscal stimulus': [0, 0, 1, 1], 'financial inclusion': [0, 0, 1, 6], 'intense affirmative action': [0, 0, 0, 1], 'financial institutions': [0, 0, 0, 2], 'extreme affirmative action': [0, 0, 0, 1], 'rapid economic growth': [0, 0, 0, 2], 'economic activity': [0, 0, 0, 1], 'government': [5, 0, 0, 1], 'loans': [1, 1, 4, 14], 'policy': [0, 0, 0, 1], 'disbursement': [0, 0, 0, 2], 'massive investment': [0, 0, 0, 1], 'agriculture': [5, 1, 0, 6], 'food inflation': [0, 0, 0, 2], 'goods': [0, 1, 5, 27], 'greater food production': [0, 0, 0, 1], 'demand surge': [0, 0, 0, 1], 'manufacturing sector': [0, 1, 0, 2]}

"Fiscal stimulus" refers to an intense affirmative action by the government to boost economic activity in the country. It typically involves increasing government spending or reducing taxes to stimulate economic growth during a recession or period of low economic activity.

Option 1 is incorrect because it refers to a government investment in the manufacturing sector to meet the demand surge caused by rapid economic growth, which is not necessarily a fiscal stimulus.

Option 3 is incorrect because it refers to the government`s action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation, which is not a fiscal stimulus.

Option 4 is incorrect because it refers to the government`s policy of financial inclusion, which is not necessarily a fiscal stimulus.