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FAQs on Class 12 Economics Question Paper Solved (2024) - 11 - Economics Class 12 - Commerce

1. What are the main objectives of fiscal policy?
Ans. The main objectives of fiscal policy include achieving full employment, price stability, economic growth, income redistribution, and maintaining a balance between revenue and expenditure.
2. How does fiscal policy differ from monetary policy?
Ans. Fiscal policy involves the use of government spending and taxation to influence the economy, while monetary policy involves the control of the money supply and interest rates by the central bank.
3. What are the tools of fiscal policy that can be used to stabilize the economy?
Ans. The tools of fiscal policy include government spending, taxation, transfer payments, and public debt management, which can be used to influence aggregate demand and stabilize the economy.
4. How can expansionary fiscal policy help during a recession?
Ans. Expansionary fiscal policy involves increasing government spending and reducing taxes to stimulate aggregate demand, create jobs, and boost economic growth during a recession.
5. What are the potential drawbacks of using fiscal policy to stabilize the economy?
Ans. Potential drawbacks of using fiscal policy include the risk of budget deficits, crowding out private investment, inflationary pressures, and the difficulty of timing and implementing effective policy measures.
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