Public Administration Answer Writing Practice 2018 - Week 11 - Question 2

90 Days Public Administration Answer Writing Practice Question 2 for 21-Jan-2019

Instructions for Writing Answer

1. Write your answers in the comment section.

2. Experts will provide their feedback in reply.

3. Model Answers will be uploaded on this page the next day.

4. Rectify your mistakes and progress further.

5. All the Best.

21-Jan-2019 - Question 2

“Fiscal policy and monetary policy are the two tools used by the State to achieve its macroeconomic objectives.” Examine the statement and point out the differences between the tools. (2016)

For Question 1- Click Here

Model Answer

Answers should include the following :

Introduction- Few lines regarding macroeconomics objectives, monetary policy, and fiscal policy.

Body - Addressing the needs of the question, Difference between the fiscal and monetary policy. importance and components of both

Conclusion The usage of both and impact on the economy of the country.

Some few points for references  

Monetary policy is a policy employing the central bank control of the supply of money as an instrument for achieving the objectives of general economic policy is monetary policy. Monetary policy is related to the availability and cost of money supply in the economic order to attain certain broad objectives. While fiscal policy is concerned with the raising of government revenue and incurring of government expenditure.  The macroeconomic objective is employment generation, price stability, equal income distribution and sustainable rate of economic growth.

As the Central bank is responsible for the monetary policy while the central government is responsible for the fiscal policy. The fiscal policy of an economy is more directly connected to public policies of the administration. The fiscal policy can more directly affect the demand economy. The fiscal policy is the more effective tool to address the economic disparities exciting in the developing countries.

For the effective and effective economic policy, both monetary policy and fiscal policy have to work hand in hand. Each one has to compliment each other to achieve the macroeconomic objectives.

Note: There is no template for a correct UPSC answer, the model answer is only for your reference

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