Question

Tax reforms are concerned with the reforms in the government’s taxation and public expenditure policies, which are collectively known as its ______.
1. fiscal policy
2. financial policy
3. fiscal reforms
4. financial reforms

Answer 1

Correct Answer - Option 1 : fiscal policy

The correct answer is fiscal policy.

• Fiscal policy is concerned with the government’s taxation and public expenditure.
• Fiscal policy is how 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.

• Financial policies, which are adopted by the legislative body, provide written guidance for how local government officials and staff should approach fiscal issues and core financial areas.
  • It is related to the regulation, supervision, and oversight of the financial and payment systems, including markets and institutions.
  • The view of policies is in promoting financial stability, market efficiency, and client-asset and consumer protection.
  • Financial Management takes financial decisions under three main categories namely, investment decisions, financing decisions, and dividend decisions.
• Fiscal reform refers to a wide range of structural adjustments to a country’s fiscal system, particularly taxation models and fiscal incentives.
  • It can reflect the true values and importance of biodiversity and ecosystem services in national economies.
• Financial reforms are introduced in the bank to remove the deficiencies of the banking sectors in India.
  • The main intent of reforms is to uphold a diversified, efficient, and competitive financial system with the aim of improving the allocative efficiency of resources through operational flexibility, improved financial viability and institutional solidification.