Question

What is the main objective of fiscal policy?

• A. Increase in output
• B. Achieve high level of employment
• C. Increase in income
• D. All of these

Hint:

Fiscal policy includes government actions to influence the economy, targeting increased output, employment, and income.

Answer 1

The Correct Option is D

Step 1: Understanding fiscal policy.
Fiscal policy refers to the government's use of public spending and tax policies to influence the economy. The main objective of fiscal policy is to stabilize the economy, promote employment, increase income levels, and enhance output.

Step 2: Analyzing the options.
(A) Increase in output: This is a key objective of fiscal policy. By increasing government spending or adjusting taxes, the government aims to increase the national output.
(B) Achieve high level of employment: Correct. A high level of employment is another goal of fiscal policy, as increasing output often leads to higher employment.
(C) Increase in income: Correct. Fiscal policy can lead to an increase in national income by stimulating economic activity.
(D) All of these: Correct. All of the above are objectives of fiscal policy.

Step 3: Conclusion.
The correct answer is (D) All of these, as fiscal policy aims to increase output, employment, and income.