What Is "Fiscal Policy'"? Why Some Economists Consider Fiscal Policy To Be More Reliable Than The Monetary Policy? Why Is Fiscal Policy So Important In A Country Like India'?

Question

What Is "Fiscal Policy'"? Why Some Economists Consider Fiscal Policy To Be More Reliable Than The Monetary Policy? Why Is Fiscal Policy So Important In A Country Like India'?

2 Answers

Answer Question

Answer 1

Fiscal Policy is the government policy that governs government taxes and spending. These policies are made just to influence or change the direction of the economy as a whole.

Actually neither one of these policies can work alone. They have to work together in order to have a greater impact on the society. The monetary policy works towards controlling the interest rates and the supply of money in order to stabilize the economy. Whereas the Fiscal policy attempts to control the government spending and the taxation. Fiscal policy is formulated to impact the aggregate demand, level of economic activity, pattern of resource allocation and distribution of income. They both go hand in hand.

Answer 2

Fiscal Policy is the government policy
that governs government taxes and spending. These policies are made just to influence or change the direction of the economy as a whole.

Actually neither one of these policies can work alone. They have to work together in order to have a greater impact on the society. The monetary policy works towards controlling the interest rates and the supply of money
in order to stabilize the economy. Whereas the Fiscal policy attempts to control the government spending and the taxation. It also controls Public Debt -- Both Internal & External and also Deficit Financing. Fiscal policy is formulated to impact the aggregate demand, level of economic activity, pattern of resource allocation and distribution of income. They both go hand in hand. They both go a long way in stabilising the economy at full employment and a constant price rate.