Question

According to Otto Eckstein, fiscal policy includes changes in taxes and expenditure which aim at which short run goals?

Options

• Full employment, price level and stability

• Export promotion, import substitution and debt reduction

• Long run economic growth, capital formation and savings

• Balanced budget, surplus budget and deficit budget

Answer 1

Otto Eckstein defined fiscal policy as changes in taxes and expenditure which aim at the short run goals of full employment, price level and stability. His definition specifically links fiscal tools to short-run macroeconomic stabilisation objectives.