ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There are three types of fiscal policy. They are neutral policy, expansionary policy, and contractionary policy.

Detailed explanation-2: -The government possesses two major fiscal tools for influencing the economy. These tools can be divided into spending tools and revenue tools. Spending tools refer to the overall government spending. On the other hand, revenue tools refer to taxes collected by the government.

Detailed explanation-3: -The three main components of the Fiscal Policy of any country are – government receipts (revenue and capital), government expenditure (revenue and capital) and public debt.

Detailed explanation-4: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations.