Question

Which best describes one of the primary aims of government fiscal policy? to restrict price changes to put more money into citizens’ hands to generate new investment opportunities to control real interest rates

Answer 1

The primary aim of government fiscal policy is to regulate the economy's growth by managing the business cycle through changes in government spending and taxation. These changes influence aggregate demand and supply, with a focus on either stimulating growth or reducing inflation, depending on the economic context.

Step-by-step explanation:

One of the primary aims of government fiscal policy is to manage the business cycle and economic growth over time. This management is achieved through the manipulation of government spending and tax policy, which, in turn, influences aggregate demand and aggregate supply within the economy. Through expansionary fiscal policy, which involves increasing government spending or decreasing taxes, the government aims to increase aggregate demand, thereby stimulating economic activity and growth. Conversely, with contractionary fiscal policy, which includes decreasing government spending or increasing taxes, the goal is to reduce aggregate demand, thus cooling down an overheating economy.

Additionally, fiscal policy can be growth-oriented with a focus on investment in areas such as human capital, technology, and physical plant and equipment. Such investments, which can be made directly or through incentives, aim to shift the aggregate supply curve to the right. This represents a strategic approach to increasing the economy's capacity and sustaining long-term growth.

Answer 2

I believe the correct answer would be B. To put more money into citizens hands.

Although I don't actually agree that it's true that's what I think is right for the test. Hope this helps and pls correct me if I'm wrong.