Which one among the following is *not* a component of fiscal policy ?

Taxation policy

Public debt policy

Trade policy

Public expenditure policy

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Answer is Wrong!

This question was previously asked in

UPSC CAPF – 2011

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The correct option is C) Trade policy.

Fiscal policy refers to the use of government spending and taxation to influence the economy. It includes decisions about government revenue (taxation policy), government expenditure (public expenditure policy), and how the government manages its finances, including borrowing (public debt policy). Trade policy, which deals with international trade regulations like tariffs, quotas, and agreements, is a part of overall economic policy but is distinct from fiscal policy.

Fiscal policy is primarily concerned with the government’s budget – how it earns income (mostly through taxes) and how it spends money. These decisions impact aggregate demand, inflation, employment, and economic growth. Monetary policy, controlled by the central bank, is another major tool for influencing the economy, dealing with interest rates and money supply. Trade policy falls under the broader umbrella of economic policy but is not typically classified as a component of *fiscal* policy.

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