What is the primary objective of the government's fiscal policy?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. To ensure maximum employment.
- The primary objective of the government’s fiscal policy is to manage the economy by using government spending and taxation to achieve macroeconomic goals, which include:
- Ensuring maximum employment: Fiscal policy aims to create jobs and reduce unemployment through public expenditure on infrastructure, social programs, and development projects.
- Economic growth: By stimulating demand and investment.
- Price stability: Controlling inflation or deflation.
Other Options:
- To destabilize the economy—fiscal policy aims to stabilize, not destabilize.
- To sell goods to the USA—this relates to trade policy, not fiscal policy.
- To push inflation—Fiscal policy may control inflation, but its objective is not to push it.