Question
Download Solution PDFWhich among the following is a tool of Fiscal Policy ?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is option 1.
Key Points
- Taxes are a key tool of Fiscal Policy, which involves the government's revenue (taxation) and expenditure to influence the economy. Hence option 1 is the correct answer.
- By adjusting tax rates, the government can manage economic growth, inflation, and employment levels.
Additional Information
- Cash Reserve Ratio (CRR): A monetary policy tool used by the Reserve Bank of India (RBI) to regulate liquidity in the banking system.
- Credit Ceiling: A monetary policy instrument to control the amount of credit banks can extend, used by central banks.
- Bank Rate: Another monetary policy tool where the central bank controls the rate at which it lends money to commercial banks.
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