B Com Exam > B Com Videos > Public Finance > Introduction to Fiscal Policy, Public Finance
Introduction to Fiscal Policy, Public Finance Video Lecture | Public Finance - B Com
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FAQs on Introduction to Fiscal Policy, Public Finance Video Lecture - Public Finance - B Com
| 1. What is fiscal policy? |  |
Ans. Fiscal policy refers to the use of government spending and taxation to influence the economy. It involves decisions made by the government regarding how much money to spend, where to spend it, and how much to tax. The aim of fiscal policy is to stabilize the economy, promote economic growth, and control inflation.
| 2. How does fiscal policy work? | |
Ans. Fiscal policy works by adjusting government spending and taxation to either stimulate or cool down the economy. In times of recession or low economic activity, the government may increase spending and lower taxes to encourage consumer and business spending, thus boosting economic growth. Conversely, during periods of high inflation, the government may decrease spending and raise taxes to reduce the amount of money circulating in the economy.
| 3. What are the tools of fiscal policy? | |
Ans. The tools of fiscal policy include government spending and taxation. By increasing or decreasing government spending, the government can directly influence the level of economic activity. Similarly, by adjusting tax rates, the government can impact individuals' and businesses' disposable income, thus affecting their spending and saving behavior.
| 4. What are the goals of fiscal policy? | |
Ans. The primary goals of fiscal policy are to promote economic stability, achieve full employment, stimulate economic growth, and control inflation. By using fiscal policy tools effectively, the government aims to create an environment that encourages investment, job creation, and overall economic prosperity.
| 5. What is the difference between fiscal policy and monetary policy? | |
Ans. Fiscal policy and monetary policy are both tools used by governments to manage the economy, but they operate through different mechanisms. Fiscal policy involves government spending and taxation decisions, while monetary policy involves the control of interest rates and the money supply by central banks. Fiscal policy is implemented through the government's budget, while monetary policy is implemented by the central bank's decisions on interest rates and open market operations.
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Dec 20, 2024 Last updated |
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