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Fiscal Policy Video Lecture | Economics for GCSE/IGCSE - Class 10

FAQs on Fiscal Policy Video Lecture - Economics for GCSE/IGCSE - Class 10

1. What is fiscal policy?
Ans. Fiscal policy refers to the government's use of taxation and public spending to influence the economy. It is used to achieve macroeconomic objectives such as controlling inflation, reducing unemployment, and promoting economic growth.
2. How does fiscal policy differ from monetary policy?
Ans. Fiscal policy involves government decisions on taxation and spending, while monetary policy involves the central bank's control over the money supply and interest rates. Fiscal policy directly impacts government revenue and expenditure, while monetary policy influences borrowing, lending, and investment in the economy.
3. What are the main tools of fiscal policy?
Ans. The main tools of fiscal policy include changes in government spending, changes in taxation, and changes in government borrowing. By adjusting these tools, the government can stimulate or cool down the economy to achieve desired economic outcomes.
4. How can fiscal policy be expansionary or contractionary?
Ans. Fiscal policy is expansionary when the government increases spending or reduces taxes to stimulate economic growth. It is contractionary when the government decreases spending or increases taxes to slow down the economy and control inflation.
5. What are the potential limitations of fiscal policy?
Ans. Some limitations of fiscal policy include time lags in implementation, the risk of budget deficits and debt accumulation, crowding out private investment, and the difficulty of accurately predicting the impact of policy changes on the economy.
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