ECONOMICS (CBSE/UGC NET)

ECONOMICS

FISCAL POLICY

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following is not a tool of fiscal policy?

A	Taxing
B	Spending
C	Interest Rates
D	All of these options are tools of fiscal policy.

Explanation:

Detailed explanation-1: -The correct answer is Interest Rate. Interest Rate does not form part of the fiscal policy of a country.

Detailed explanation-2: -Monetary policy and fiscal policy are two different tools that have an impact on the economic activity of a country. Monetary policies are formed and managed by the central banks of a country and such a policy is concerned with the management of money supply and interest rates in an economy.

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: -The correct answer is Wealth tax.

There is 1 question to complete.