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. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals.

Detailed explanation-2: -Contractionary fiscal policy is used to slow economic growth, such as when inflation is growing too rapidly. The opposite of expansionary fiscal policy, contractionary fiscal policy raises taxes to cut spending. As consumers pay more taxes, they have less money to spend, and economic stimulation and growth slow.

Detailed explanation-3: -Fiscal policy tools are used by governments to influence the economy. These primarily include changes to levels of taxation and government spending. To stimulate growth, taxes are lowered and spending is increased. This often involves borrowing by issuing government debt.

Detailed explanation-4: -There are three types of fiscal policy. They are neutral policy, expansionary policy, and contractionary policy.

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.