Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase government revenue through taxation
B
To regulate the money supply in the economy
C
To influence the economy by adjusting government spending and taxation
D
To control inflation directly by setting price limits
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of fiscal policy is to manage the economy by adjusting government spending and tax policies, which can help control national debt. When the government spends more than it earns from taxes, it borrows money, leading to national debt. Fiscal policy aims to balance this by increasing revenue through taxes or reducing spending to lower debt levels. For example, if a government decides to build more schools, it might raise taxes to pay for this project, ensuring it doesn't add too much to the national debt. By carefully managing these financial decisions, fiscal policy helps maintain economic stability and supports long-term growth.
Detailed Explanation
Fiscal policy helps the government manage the economy by changing how much it spends and collects in taxes. Other options are incorrect because Some might think that raising taxes is the main goal of fiscal policy; People may confuse fiscal policy with monetary policy, which controls the money supply.
Key Concepts
Fiscal policy
Topic
Fiscal Policy and National Debt
Difficulty
easy level question
Cognitive Level
understand
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