Question

State two objectives of fiscal policy.

Answer 1

The following objectives of fiscal policy are as follows:

1. Raising Revenues: In order to meet the state expenditure for carrying out its functions, the government levy taxes of different types so that its revenue may increase.
2. Economic Growth: Economic growth is nothing, but an increase in the economic activities or economic variables over a period of time along with reduction in poverty, unemployment and income inequalities.
   Economic growth enables a country to produce more goods and services and thereby help in raising the standard of living of the people. Moreover, high rate of economic growth helps in solving the problems of poverty and unemployment in developing countries like India.