Economics Questions and Answers

Fiscal policy involves the government changing tax and spending levels in order to influence the level of Aggregate Demand. To reduce inflationary pressures the government can increase tax and reduce government spending.

The two main components of fiscal policy are government revenue and government expenditure. In fiscal policy, the government controls inflation either by reducing private spending or by decreasing government expenditure, or by using both. It reduces private spending by increasing taxes on private businesses.

Indirect taxes: An indirect tax is a tax levied on goods and services rather than on income or profits. indirect taxes are regressive in nature. They are consumption based taxes, service tax, value added tax,customs and excise duty etc are examples of Taxes are regressive when they impose a harsher burden on the poor than on the rich.

The stock market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place.

Agricultural bank: a type of bank that lends money to farmers for longer periods of time and charges them less interest than other types of banks. they do not trade in the capital market.

Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods.