3.

What is fiscal policy

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to
monitor and influence a nation's economy. It is the sister strategy to monetary policy through
which a central bank influences a nation's money supply.

Tools of fiscal policy

 The first tool is taxation. That includes income, capital gains from investments,
property, and sales. Taxes provide the income that funds the government. The
downside of taxes is that whatever or whoever is taxed has less income to spend on
themselves. As a result, taxes are unpopular.

 The second tool is government spending. That includes subsidies, transfer payments
including welfare programs, public works projects, and government salaries.
Whoever receives the funds has more money to spend. That increases demand and
economic growth.

4. What are the sources of gov. Fund

Source # 1. Tax:
A tax is a compulsory levy imposed by a public authority against which tax payers cannot
claim anything. It is not imposed as a penalty for only legal offence.
Source # 2. Rates:
Rates refer to local taxation, i.e., taxation levied by (or for) local rather than central
government.
Source # 3. Fees:
Fee is a payment to defray the cost of each recurring service undertaken by the government,
primarily in the public interest.
Source # 4. Licence fee:
A licence fee is paid in those instances in which the government authority is invoked simply
to confer a permission or a privilege.
Source # 5. Surplus of the public sector units:
The government acts like a business- person and the public acts like its customers. The
government may either sell goods or render services like train, city bus, electricity, transport,
posts and telegraphs, water supply, etc.
Source # 6. Fine and penalties:
They are the charges imposed on persons as a punishment for contravention of a law. The
main purpose of these is not to raise revenue from the public but to force them to follow law
and order of the country.
Source # 7. Gifts and grants:
Gifts are voluntary contribution from private individuals or non-government donors to the
government fund for specific purposes such as relief fund, defence fund during war or an
emergency.
Source # 8. Printing of paper money:
It is another source of revenue of the government. It is a method of creating extra resources.
Source # 9. Borrowings:
Borrowings from the public is another source of government revenue. It includes loans from
the public in the form of deposits, bonds, etc. and also from the foreign agencies and
organisations.

What are the uses of gov. Fund

5. What are the inherent power of the state. Explain each

1.Police power – the power of the State to enact laws in relation to persons and property so as to
promote public health, public moral, public safety and general welfare of the people.
2.Power of eminent domain – the power of the State or those to whom the power has been
delegated to take private property for public use upon paying the owner a just compensation to be
ascertained according to law.
3.Power of taxation – the power of the State by which the sovereign raises revenue to defray the
necessary expenses of the government.

6. What is tax
A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by
a governmental organization in order to fund various public expenditures.

What is tax system

a legal system for assessing and collecting taxes

7. What are the characteristics of summed tax system

8. What are the characteristics of tax

1.Direct Tax payment has age limit
2.Tax is a compulsory levy that must be paid by an individual or corporate body
3.It is levied by the government or its agencies
4.Tax payment is made for the general welfare of the public
5.Tax is made for the growth and development of the country

9. What are the kinds of tax

Income Tax - a percentage of individual earnings filed to the federal government
Corporate Tax - a percentage of corporate profits taken as tax by the government to fund
federal programs.
Sales Tax - taxes levied on certain goods and services
Property Tax - based on the value of land and property assets

Tariff - taxes on imported goods imposed in the aim of strengthening internal businesses
Estate tax - rate applied to the fair market value of a property at the time of death
10. What are the stages of taxation system