Question

Fiscal policy refers to:-
1. Agricultural fertilizer policy
2. Rural credit policy
3. Interest policy
4. Related to the revenue and expenditure policy of the government

Answer 1

Correct Answer - Option 4 : Related to the revenue and expenditure policy of the government

The correct answer is Related to the revenue and expenditure policy of the government.

• Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.
• Fiscal policy deals with the taxation and expenditure decisions of the government. Some of the major instruments of fiscal policy are as follows: Budget, Taxation, Public Expenditure, public revenue, Public Debt, and Fiscal Deficit in the economy.

• General objectives of Fiscal Policy are given below:
  • To maintain and achieve full employment.
  • To stabilize the price level.
  • To stabilize the growth rate of the economy.
  • To maintain equilibrium in the Balance of Payments.
  • To promote the economic development of underdeveloped countries.
• The fiscal policy of India always has two objectives, namely improving the growth performance of the economy and ensuring social justice to the people.