ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. In taxes and expenditures, fiscal policy has for its field of action matters that are within government’s immediate control.

Detailed explanation-2: -Contractionary fiscal policy, on the other hand, is a measure to increase tax rates and decrease government spending. It occurs when government deficit spending is lower than usual.

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 Balances and Growth Since there is less need to create money to finance government expenditure, the resulting inflation rates for countries with low budget deficits are often lower. Low fiscal deficits also increase the pool of savings for higher levels of investment, leading to higher economic growth.