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Q67 (CAPF/2011) Economy › Government Finance & Budget › Budget classification Answer Verified

Which one among the following is not a component of fiscal policy ?

Result
Your answer: —  Â·  Correct: C
Explanation

Fiscal policy refers to the segment of national economic policy concerned with steering the economy through changes in government receipts and expenditure [2]. Its primary components include taxation policy, public expenditure policy, and public debt management [3]. Taxation policy involves the generation of revenue through direct and indirect taxes to fund essential services and influence economic activity [t2][t3]. Public expenditure policy focuses on the allocation of government spending to build infrastructure and human capital [t2]. Public debt policy (or debt management) is essential for financing budget deficits and ensuring long-term fiscal sustainability [t1][t2]. In contrast, trade policy is a distinct component of external sector policy, focusing on tariffs, exports, and imports to regulate international trade rather than the government's internal budgetary purse [t5][t6]. Therefore, trade policy is not considered a core component of modern fiscal policy.

Sources

  1. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Components of Fiscal Policy > p. 83
  2. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > FISCAL POLICY > p. 82
  3. [3] https://www.ombudsman.gov.ph/UNDP4/wp-content/uploads/2012/12/Chap2_FAQ.pdf
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