Question

Name two instruments of Fiscal Policy.

Answer 1

Two instruments of Fiscal policy are:

1. Taxation: Taxes are a method of transferring income from individuals to the government, either directly or indirectly. It lowers the amount of money available for discretionary spending. Increased taxes aid in the control of inflation.
2. Public Dept: It refers to debts taken out by a government, either within or outside of the country. It is responsible for transferring monies from the general people to the government.