SSC CGL 2025 PYQ — Question 25

The correct answer is option 3 i.e. Decrease in government spending.

Expansionary fiscal policy aims to stimulate economic growth by increasing aggregate demand. To achieve this, the government injects money into the economy. This is done through two primary mechanisms: increasing government spending (on infrastructure, welfare, etc.) and decreasing taxes (both personal and business taxes) to leave consumers and corporations with more disposable income to spend and invest.

Therefore, a decrease in government spending is NOT a characteristic of expansionary policy; instead, it is a tool of contractionary fiscal policy designed to cool down an overheating economy.