मंदीच्या काळात खालीलपैकी कोणते राजकोषीय धोरण अधिक यशस्वी ठरेल ?

The correct answer is Option D (A cut in taxes and an increase in the public expenditure).

Key Points:
• During an economic Depression / Recession, aggregate effective demand collapses, businesses shut down, and severe cyclical unemployment emerges.
• Keynesian Counter-Cyclical Fiscal Policy:
• As established by John Maynard Keynes during the Great Depression of the 1930s, the state must deploy an Expansionary Fiscal Policy.
• Cut in Taxes: Lowering direct and indirect taxes leaves households with higher disposable income to spend and incentivizes firms to resume capital investments.
• Increase in Public Expenditure: Large-scale government spending on public works (infrastructure, roads, bridges) pumps liquidity into the economy, triggering the fiscal multiplier to stimulate aggregate demand.
• Increasing taxes or slashing public spending acts as pro-cyclical contraction, which deepens the depression.
• Hence, Option 4 is the most effective policy stance.
• Key Takeaway: Depression requires expansionary fiscal policy: slashing taxes to spur consumption and expanding public expenditure to rebuild demand.