Why Is Fiscal Policy The Most Important Tool Used By Government To Achieve Its Economic Objective?


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amber Jhon answered
Basically Fiscal Policy is the important tool which can affect the economic objectives. Therefore, government use Fiscal policy to achieve the economic goals. For example, it can affect the level of aggregate demand in the economy. In this way prices stability can be gained, full employment can be promoted and economic growth is boosted. According to Keynesian economics, the adjustments of government spending and the taxation policy in Fiscal decisions can stimulate the aggregate demand. Fiscal tools can also help the government to achieve its objectives in recession and low economy.

It gives the tools to get economic objectives because inflation can be controlled through fiscal policy. Development planning of government in fiscal policy can accelerate foreign investments. In this way a foreign policy can help in making a framework of social, cultural and political conditions in the country.

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