The main goal of fiscal policy should always be to
A)generate a budget deficit.
B)balance the budget.
C)balance C + I with government spending.
D)balance aggregate demand with aggregate supply.

Question

Quizplus · Accepted Answer

The main goal of fiscal policy is to achieve macroeconomic stability, which requires balancing aggregate demand with aggregate supply. This means that government spending and taxation should be adjusted in a way that supports economic growth, low inflation, and low unemployment. Balancing the budget (option B) and generating a budget deficit (option A) may not necessarily support this goal, as it depends on the economic context. Option C, balancing C + I with government spending, is not a widely recognized goal of fiscal policy.

The Main Goal of Fiscal Policy Should Always Be to