ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the United States, fiscal policy is directed by both the executive and legislative branches of the government. In the executive branch, the President and the Secretary of the Treasury, often with economic advisers’ counsel, direct fiscal policies.

Detailed explanation-2: -The correct answer is the Ministry of Finance. Fiscal policy is formulated by the Ministry of Finance.

Detailed explanation-3: -Fiscal policy is the application of taxation and government spending to influence economic performance. The main aim of adopting fiscal policy instruments is to promote sustainable growth in the economy and reduce the poverty levels within the community.

Detailed explanation-4: -Policy tools The two main tools of fiscal policy are taxes and spending. Taxes influence the economy by determining how much money the government has to spend in certain areas and how much money individuals should spend. For example, if the government is trying to spur consumer spending, it can decrease taxes.

Detailed explanation-5: -Fiscal policy originated with the theories of John Maynard Keynes, the famous British economist. He puts forth the idea that a government can manage the growth of an economy through tax and spending.