The use of taxation and government expenditure to regulate economic activities is called:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → fiscal management
Fiscal management is the use of taxation and government expenditure to regulate economic activities. It is one of the areas in which the reforms have been criticised.
Deficit financing is a different idea: it is the situation where government expenditure exceeds its revenue. Disinvestment is the sale of part of the capital stock of a company, and deregulation removes controls on industry.
NCERT (2026-27): Glossary: “Fiscal Management – The use of taxation and government expenditure to regulate the economic activities.” Glossary: “Deficit Financing – A situation where the expenditure of the government exceeds its revenue.” Glossary: “Disinvestment – A deliberate sale of a part of the capital stock of a company to raise resources and change the equity and/or management structure of a company.” |