Question

Fiscal policy refers to the government's adjustment of its spending levels and tax rates to monitor and influence the economy. Which three elements does fiscal policy deal with?

Options

• Public expenditure, public revenue and public debt (public borrowing)

• Credit creation, reserve requirements and open market operations

• Private investment, exports and imports

• Money supply, interest rates and exchange rates

Answer 1

Fiscal policy operates through the government's budget and deals with three elements: public expenditure, public revenue, and public debt (public borrowing). Options involving money supply, interest rates or credit creation relate to monetary policy, not fiscal policy.