Question : Fiscal policy refers to:
Option 1: Government policies that affect the overall level of economic activity
Option 2: Monetary policies implemented by the central bank
Option 3: Policies aimed at reducing inflation
Option 4: Policies aimed at reducing unemployment
Correct Answer: Government policies that affect the overall level of economic activity
Solution : The correct answer is (a) Government policies that affect the overall level of economic activity
Fiscal policy refers to the use of government spending and taxation to influence the overall level of economic activity in an economy. It involves decisions made by the government regarding its expenditure on public goods and services, as well as its revenue generation through taxes.
Through fiscal policy, the government aims to achieve macroeconomic objectives such as promoting economic growth, reducing unemployment, controlling inflation, and maintaining economic stability. It involves decisions on the allocation of government resources, the level of government spending, and the use of taxation to influence the economy.
Fiscal policy is distinct from monetary policy, which involves actions taken by the central bank to manage the money supply, interest rates, and banking system to influence economic activity.
Question : A recession is characterized by:
Option 1: High inflation and high unemployment
Option 2: Low inflation and high unemployment
Option 3: High inflation and low unemployment
Option 4: Low inflation and low unemployment
Question : Stagflation is a situation characterized by:
Question : Which policy aimed to reduce the fiscal deficit and promote fiscal discipline in the 1991 economic policy?
Option 1: Monetary policy
Option 2: Fiscal policy
Option 3: Public debt policy
Option 4: External debt policy
Question : The monetary policy is controlled by the:
Option 1: Government
Option 2: Central bank
Option 3: Stock market
Option 4: Commercial banks
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