ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Ministry of Finance formulates the fiscal policy.

Detailed explanation-2: -governments. To provide the basis for this assignment and give medium term guidance on fiscal matters, the Constitution provides for the formation of a Finance Commission (FC) every five years. Based on the report of the FC the central taxes are devolved to the state governments.

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 fiscal authorities can tax wage income and profits (dividends) at separate rates. As profits are pure rents in this model, optimal policy taxes them fully. We therefore initially set the tax rate on profits to unity and compute the Ramsey optimal inflation rate and tax rate on wages.

Detailed explanation-5: -Fiscal policy is concerned with public revenue, public expenditure, and debt. Fiscal policy is the part of government economic policy which deals with, expenditure, taxation, borrowing and the management of public debt in the economy. It is basically concerned with the flow of funds in the economy.