Question

Explain any two objectives of the fiscal developing economy.

Answer 1

Fiscal and monetary policies work together to achieve the goals of economic growth and stability. The primary goal of fiscal policy in a developing nation should be to accelerate economic growth.

There are various objectives of fiscal policy:

1. Economic stability.
2. Encouraging investment.
3. Capital Formation and Growth
4. Total Employment, etc.

1. Encourage investment: Fiscal policy attempts to increase investment in both the public and private sectors. In other words, fiscal policy should aim for quick economic expansion and stimulate investment in channels that society deems most desirable.
2. Equitable distribution of income and wealth: To eliminate inequities and promote distributive justice, the government should invest in productive channels that benefit low-income groups and assist them in increasing productivity and technology. As a result, redistributive spending should aid economic development, as should redistribution. Thus, in a developing economy, fiscal policy has a variety of purposes.