ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Decreasing taxes
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Decreasing spending
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Decreasing aggregate demand
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Increasing taxes
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Detailed explanation-1: -Detailed Solution. The correct answer is Interest Rate. Interest Rate does not form part of the fiscal policy of a country.
Detailed explanation-2: -A contractionary policy is a tool used to reduce government spending or the rate of monetary expansion by a central bank to combat rising inflation. The main contractionary policies employed by the United States include raising interest rates, increasing bank reserve requirements, and selling government securities.
Detailed explanation-3: -To increase liquidity in economy is not the main objective of Fiscal Policy in India.
Detailed explanation-4: -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.