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CSS Audit Tax Finance P-II QUESTION #1225
Question 1
Taxes are an important instrument of which of the following policy?
  • Monetary Policy
  • Fiscal Policy✔️
  • Trade Policy
  • Economic Policy
Correct Answer Explanation
Taxes are the core instrument of Fiscal Policy — the government's use of revenue collection (taxes) and spending to influence aggregate demand, resource allocation, income distribution, and economic stability. Monetary policy uses interest rates and money supply, while trade policy uses tariffs and trade agreements.