Taxes and government expenditures are instruments of _________?

A. Monetary policy
B. Tax policy
C. Economic policy
D. Fiscal policy

Correct Answer:

Option D – Fiscal policy

Explanation

Fiscal policy may be defined as the use of income and expenditure instruments or policies to control or regulate the economic activities in a country. It is a plain action by government pertaining to the raising of revenue through taxation and other means and the pattern of expenditure to be applied.