discuss the funds used to collect money under the fiscal policy of india. which tools government incorporates to collect money under the fiscal policy?
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Answer:
Fiscal policy is defined as the means by which a government adjusts it's spending levels and tax rate to monitor and influence a nation's economy.
Fiscal policy of India is the guiding force that helps the government of India decide how much money it should spend to support the economic activity and how much revenue it must earn from the system to keep the wheels of the economy running smoothly.
THE FUNDS USED TO COLLECT MONEY UNDER FISCAL POLICY OF INDIA.
The main funds used under the fiscal policy of India are
1. Government Expenditure - this is whereby the government spends more money and as a result it releases more flow of money in the economy
2. Taxes- the government controls the flow of money in the economy through taxation. If the government is trying to increase spending among consumers, it decreases tax and if it wants to decrease consumer spending, it increases tax.
THE TOOLS GOVERNMENT INCORPORATE TO COLLECT MONEY UNDER FISCAL POLICY.
The main tools the government used to collect money under fiscal policy are
1. Taxes - taxes influence the economy by determining how much money the government has spend in certain areas and how much money individuals should spend. For example the government decreases tax inorder to increase the consumer spending.
2. Government spending - when the government increases it's spending, money is readily available in the economy.
TYPES OF FISCAL POLICY
1. Expansionary fiscal policy- in this fiscal policy the government spends more money than it collects through taxes.
2. Contractionary fiscal policy- in this fiscal policy the government collets more money through taxes than it spends
3. Neutral fiscal policy- in this fiscal policy is at equilibrium that is the government spending is equal to what the government collects