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

1. What are the main objectives of fiscal policy?
Ans. The main objectives of fiscal policy include achieving full employment, controlling inflation, promoting economic growth, and achieving income distribution.
2. How does fiscal policy differ from monetary policy?
Ans. Fiscal policy involves government spending and taxation decisions to influence the economy, while monetary policy involves controlling the money supply, interest rates, and credit conditions.
3. What are the tools of fiscal policy that governments use to achieve their economic objectives?
Ans. The main tools of fiscal policy include government spending, taxation, and borrowing. Governments can increase spending, cut taxes, or borrow money to stimulate the economy.
4. How can fiscal policy be used to combat a recession?
Ans. During a recession, governments can implement expansionary fiscal policy by increasing government spending or cutting taxes to boost aggregate demand and stimulate economic growth.
5. How does fiscal policy impact the national debt and future generations?
Ans. Fiscal policy decisions, such as increased government spending or tax cuts, can lead to higher budget deficits and increased national debt. This debt burden may be passed on to future generations through higher taxes or reduced government services.
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