NECO Economics 2024 Objective — Question 40

Question 40 of 50 from the National Examinations Council (NECO) Economics 2024 Objective paper, with the correct answer and a full explanation.

Expansionary fiscal policy implies

A. A. decreasing bank loans
B. B. raising tax rates
C. C. increasing the bank rate
D. D. decreasing tax ratesCorrect

Explanation

Fiscal policy is the use of fiscal policy instrument such as taxation, budget, government revenue, expenditure etc in regulating the economy. However, a decrease in tax rates is aimed at stimulating economic activities (Expansionary fiscal policy) while the opposite is the case for a contractionary fiscal policy.

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