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Questions
Distinguish between fiscal policy and monetary policy.
State one important difference between fiscal and monetary policy.
Distinguish Between
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Solution
| Sr. No. | Fiscal Policy | Monetary Policy |
| 1. | Fiscal policy is the policy of taxation and government expenditure. | Monetary policy is the policy of central bank to control the supply of money and credit in the economy. |
| 2. | Fiscal policy affects the overall expenditure in the economy. | Changes in money supply and credit lead to change in interest rates. |
| 3. | Its instruments are: taxes, public debt, deficit financing and govt. expenditure. | Its instruments are: Bank rate, open market operations, CRR, SLR, margin requirement etc. |
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Notes
Students should refer to the answer according to their questions.
Role of State in Economic Development
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Monetary policy means regulation of money supply by the monetary authority.
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| Column I | Column II | ||
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| B. | Incidence of tax | (ii) | Simple to calculate |
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