A. only taxation to control aggregate demand
B. bank rate to influence lending
C. only government expenditure to regulate an economy
D. government revenue and expenditure to regulate an economy
Correct Answer:
Option D – government revenue and expenditure to regulate an economy
Explanation
Fiscal policy is the use of government income and expenditure instrument to regulate or control the economy. It is used to control inflation, deflation, the balance of payments deficits, economic recession, unemployment, price level, GNP etc. The two most important fiscal policy tools of government are: Government expenditure and Taxation
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