ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. It is the sister strategy to monetary policy through which a central bank influences a nation’s money supply.

Detailed explanation-2: -Fiscal policy is the use of government spending and taxation to influence the economy.

Detailed explanation-3: -Fiscal policy is defined as the policy under which the government uses the instrument of taxation, public spending and public borrowing to achieve various objectives of economic policy. Simply put, it is the policy of government spending and taxation to achieve sustainable growth.

Detailed explanation-4: -Fiscal policy is a means to use government spending and taxation to influence the economic situation. It is different from the monetary policy that is under the control of the central bank in that country. Together these two policies can help a country to achieve its economic goals.

Detailed explanation-5: -There are two key tools of the fiscal policy: Taxation: Funds in the form of direct and indirect taxes, capital gains from investment, etc, help the government function. Taxes affect the consumer’s income and changes in consumption lead to changes in real gross domestic product (GDP).