Question

Which among the following measures is not considered to be a part of fiscal policy?

• A. Changing tax rates
• B. Announcing new welfare schemes
• C. Increasing the interest rate
• D. Decreasing government expenditure

Answer 1

The correct option is C Increasing the interest rate

Fiscal policy refers to the use of government spending and tax policies to influence economic conditions. It can be done through a change in tax rate or a change in expenditures, such as announcing new welfare schemes. However, the decision to change interest rate falls under the authority of the central bank. Such policy modifications made by the central bank are referred to as the monetary policy. The Reserve Bank of India determines India's monetary policy.