ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Fiscal policy has a stabilizing effect on an economy if the budget balance-the difference between expenditure and revenue-increases when output rises and decreases when it falls.

Detailed explanation-2: -Fiscal policy is the use of government spending and taxation to influence the economy. Governments typically use fiscal policy to promote strong and sustainable growth and reduce poverty.

Detailed explanation-3: -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-4: -The tools of fiscal policy also aim to stabilise the economy during various inflationary pressures. In the short term, the governments may focus on macroeconomic stabilisation by cutting taxes and increasing spending to boost a weak economy or increase taxes and reduce spending during inflation.

Detailed explanation-5: -Main objectives of Fiscal Policy in India: Economic growth: Fiscal policy helps maintain the economy’s growth rate so that certain economic goals can be achieved. Price stability: It controls the price level of the country so that when the inflation is too high, prices can be regulated.