Bachelor of General Studies (BGS) Degree Practice Exam

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What is a key goal of fiscal policy?

To increase government control
To stimulate economic growth
To reduce government spending
To set tariffs

The correct answer is: To stimulate economic growth

A key goal of fiscal policy is to stimulate economic growth. Fiscal policy involves government spending and taxation decisions aimed at influencing economic activity. When a government seeks to stimulate growth, it may increase public expenditures, such as funding for infrastructure projects or subsidies for specific industries. This injection of capital into the economy can lead to job creation, increased demand for goods and services, and overall economic expansion. While other aspects such as increasing government control, reducing spending, or setting tariffs may play roles in broader economic strategies, they do not directly relate to the primary objectives of fiscal policy. The focus of fiscal policy is predominantly on managing economic performance and steering the economy toward desired outcomes, such as higher growth rates and reduced unemployment, primarily through adjusting spending and taxation measures.