Question

Identify the fiscal policy tools introduced to curb price rise related to public expenditures, taxations, and public loans.

• A. Reducing public expenditure
• B. Controlling rate of interest
• C. Increasing taxes
• D. Public debt policy

Answer 1

Answer: (A), (C), (D)

Public debt policy

Fiscal policy refers to the government's strategy with respect to public expenditure, rising revenue taxation, and public loan policy. The following are some of the ways in which it employs those policies:

(i) The government decreases supply of money by reducing its own expenditure.
(ii) Under taxation policy, the government increases taxes when price rise occurs, so that there is reduction in the supply of spending money among people.
(iii) Under public loan or debt policy, the government tries to limit total expenditure of the society by issuing loans or bringing forward different schemes.