Fiscal policy is the policy of the government regarding:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → the level of government spending and transfers and the tax structure
Fiscal policy works through the budget: how much the government spends, the transfers it makes and the taxes it collects.
Money supply, interest rates and bank credit belong to monetary policy, run by the RBI. The exchange rate and the balance of payments belong to the open economy.
NCERT (2026-27): Glossary: “Fiscal policy – The policy of the government regarding the level of government spending and transfers and the tax structure.” |