The correct answer is Open market operation. Explanation & Key Takeaways: • The tools of fiscal policy are taxes, expenditure, public debt and a nation's budget. • They consist of changes in government revenues or rates of the tax structure so as to encourage or restrict private expenditures on consumption and investment. • Public expenditures include normal government expenditures, capital expenditures on public works, relief expenditures, subsidies of various types, transfer payments and social security benefits. Related Concepts: • Taxation: • Taxation is the imposition of compulsory levies on individuals or entities by governments in almost every country of the world. • Taxation is used primarily to raise revenue for government expenditures, though it can serve other purposes as well. • Public borrowing: • It involves transfer of purchasing power from individual to government and a subsequent retransfer of the same to the individuals from the government. • Thus, public debt, in one sense, has the 'revenue effect', and, in another sense, has the 'expenditure effect'.