Question : The government's fiscal policy is aimed at ____________.
Option 1: Controlling inflation
Option 2: Reducing income inequality
Option 3: Promoting exports
Option 4: Stabilizing exchange rates
Correct Answer: Controlling inflation
Solution : The correct answer is (A) Controlling inflation.
Fiscal policy is often used by governments to manage and stabilize the economy. One of the primary objectives of fiscal policy is to control inflation, which refers to the sustained increase in the general price level of goods and services over time. By adjusting taxation and government spending, the government can influence aggregate demand and curb inflationary pressures in the economy.
Reducing income inequality and promoting exports are also goals that governments may pursue, but they are not the primary objectives of fiscal policy. Stabilizing exchange rates is primarily the responsibility of monetary policy conducted by the central bank.
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