Discussion
Fiscal policy relates to the Government decision in respect of
I. Taxation
II. Government spending
III. Government borrowing
IV. Public Debt
Answer: D
Fiscal policy relates to all of the government decisions listed: taxation, government spending, government borrowing and public debt. It is the use of the budget, that is of receipts, expenditure and the way a deficit is financed, to influence the level of output, employment and prices. Since each of I, II, III and IV is a part of fiscal policy, the keyed answer is that all the above are correct, option D. Options A, B and C leave out at least one of the items.
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