ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals.

Detailed explanation-3: -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-4: -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).

Detailed explanation-5: -Fiscal policy in India aims to raise a considerable quantity of money to fund the government’s various programmes through taxes. It aims to eliminate inequality in income and wealth distribution by giving sufficient incentives to the private sector.