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Options
- A
Stagflation
-
Low Fiscal Deficit
Correct answer
- C
High Fiscal Deficit
- D
Hyperinflation
Why this is the answer
Expansionary fiscal policy (higher spending or tax cuts) requires fiscal space. A low fiscal deficit gives the government room to stimulate demand without excessive borrowing. High deficits or hyperinflation constrain fiscal expansion, while stagflation complicates its effectiveness.
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