Fiscal Policy refers to ?
Correct answer: B. The spending and taxing policies used by the government to influence the economy
- A. The government regulation of financial intermediaries
- B. The spending and taxing policies used by the government to influence the economy
- C. The actions of the central bank in controlling the money supply
- D. The government's attitude to taxation
Explanation
Fiscal policy consists of government decisions about taxation and spending used to influence output, employment, inflation and economic growth. Central-bank control of the money supply is monetary policy, not fiscal policy.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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