Question

Except for the _______ , among the given options are instruments for Fiscal Policy.

• A. Taxation
• B. Public debt
• C. Issue of currency
• D. Deficit financing

Answer 1

The correct option is C Issue of currency

The two main instruments of fiscal policy are government taxation and expenditure. There are three main stances in fiscal policy, neutral, expansionary, and contractionary.

The four main components of fiscal policy are:

(i) expenditure and budget reform;

(ii) revenue (particularly tax revenue) mobilization;

(iii) deficit containment/ financing; and

(iv) determining fiscal transfers from higher to lower levels of government.

Hence, C is the right answer.