Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which of the following is NOT an element of a government's fiscal policy?

1. Taxation

2. Borrowing

3. Income

4. Public opinion

The correct answer is: Public opinion

Fiscal policy encompasses the strategies and actions taken by a government regarding its financial management, particularly concerning taxation and spending to influence the economy. The key elements of fiscal policy include taxation, which refers to how the government collects revenue to fund its operations and public services; borrowing, which involves raising money through loans or bonds to cover deficits or finance projects; and public spending that includes various expenditure programs to stimulate economic growth or provide welfare. Public opinion, while crucial in the broader context of governance and policy-making, does not constitute a direct element of fiscal policy itself. It can influence government decisions, including fiscal policy, but does not represent a formal mechanism or instrument like taxation or borrowing. Therefore, public opinion is correctly identified as the element that does not fit within the core framework of fiscal policy.