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    Question

    ‘Fiscal Drag’ expresses the impact of inflation on which of the following?

    A Fiscal Deficit Correct Answer Incorrect Answer
    B Tax Revenue and GDP Correct Answer Incorrect Answer
    C Black money Correct Answer Incorrect Answer
    D Investment Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Fiscal drag is an economics term referring to a situation where a government’s net fiscal position (equal to its spending less any taxation) does not meet the net savings goals of the private economy. Fiscal drag is a concept where inflation and earnings growth may push more taxpayers into higher tax bracket.

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