Which of the following was not a macroeconomic stabilization measure? (a) financial reform measures (c) fiscal correction position (b) control of inflation (d) improving the balance of payments
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Explanation:
(d) improving the balance of payments
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Fiscal correction position is the correct answer.
Explanation:
- India accepted to the World Bank and IMF's conditions and unveiled the New Economic Policy (NEP). The NEP included extensive economic reforms. This collection of policies may be divided into two categories: stability measures and structural reform measures.
- Stabilization measures are short-term actions designed to address some of the imbalances in the balance of payments and bring inflation under control. In layman's terms, this means that sufficient foreign exchange reserves were required to keep growing costs under check.
- Macroeconomic stabilisation is the establishment of a sophisticated structure of monetary and fiscal institutions and policies to decrease volatility and promote welfare-enhancing development.
- To achieve this condition, currency must be aligned with market levels, inflation must be managed, foreign exchange facilities must be established, a national budget must be developed, revenue must be generated, a transparent system of public expenditure must be established, and predatory actors must be prevented from controlling the country's resources.
- It also necessitates a set of economic rules and regulations that control budgeting procedures, central bank activities, foreign trade, local commerce, and institutions of economic governance.
- Economic growth requires the economy to be stabilised.
- Empirical research suggests that fostering an atmosphere favourable to higher rates of investment can lessen the incidence of violence, while economic expansion is associated with job creation and improved living standards.
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