Consider the following actions by the Government : 1. Cutting the tax rates 2. Increasing the government spending 3. Abolishing the subsidies In the context of economic recession, which of the above actions can be considered a part of the "fiscal stimulus" package ?

1. The question asks which actions can be considered part of a "fiscal stimulus" package during an economic recession. 2. Fiscal stimulus aims to boost aggregate demand during a recession through government action. 3. Action 1: Cutting the tax rates leaves more disposable income with individuals and corporations, encouraging consumption and investment, thus boosting demand. This is a standard fiscal stimulus measure. 4. Action 2: Increasing the government spending directly injects money into the economy, increasing aggregate demand (through consumption or investment). This is a core fiscal stimulus measure. 5. Action 3: Abolishing the subsidies would likely reduce the purchasing power of beneficiaries or increase costs for producers/consumers, potentially dampening demand. This is generally considered a measure of fiscal consolidation (reducing deficit), not stimulus. 6. Therefore, cutting tax rates (1) and increasing government spending (2) are actions consistent with a fiscal stimulus package.