Q. With reference to Fiscal policy, which of the following can be considered as part of ‘countercyclical’ policy approach:
1. Reducing spending during a recession
2. Reducing spending during a boom period
3. cutting taxes during a boom period.
Which of the statements given above is / are correct? 
Answer: A
Notes:
- A ‘procyclical fiscal policy’ can be summarized simply as governments choosing to increase government spending and reduce taxes during an economic expansion, but reduce spending and increase taxes during a recession. A ‘countercyclical’ fiscal policy takes the opposite approach: reducing spending and raising taxes during a boom period, and increasing spending and cutting taxes during a recession.
Source- Article
