Question : What is the main objective of fiscal policy?
Option 1: To promote economic growth
Option 2: To reduce inflation
Option 3: To reduce unemployment
Option 4: To achieve a balance of trade
Correct Answer: To promote economic growth
Solution : The main objective of fiscal policy is (a) to promote economic growth.
Fiscal policy refers to the use of government spending and taxation to influence the overall economy. Its primary goal is to achieve and sustain economic growth by managing aggregate demand, stabilizing the business cycle, and fostering a favorable environment for investment, consumption, and production.
While fiscal policy can have an impact on other macroeconomic variables such as inflation, unemployment, and the balance of trade, its overarching objective is to support and enhance economic growth. By adjusting government spending levels and tax rates, fiscal policy aims to stimulate economic activity, encourage investment, and create conditions for long-term sustainable growth.
