What is the primary goal of fiscal policy?

The primary goal of fiscal policy is to regulate public spending and taxation. Fiscal policy involves the government's use of spending and taxation decisions to influence the economy. By altering levels of public expenditure and adjusting tax rates, the government aims to achieve various economic objectives, such as stimulating economic growth, increasing employment, and maintaining price stability.

When the government increases public spending, it injects money into the economy, potentially boosting demand and leading to job creation, which can help reduce unemployment. Conversely, by decreasing spending or increasing taxes, the government can cool down an overheated economy, thus controlling inflation. Therefore, while it can indirectly affect factors like inflation and unemployment, the regulation of public spending and taxation is the fundamental mechanism through which fiscal policy operates.

Other choices focus on related but distinct issues. Controlling inflation is a goal of fiscal policy, but it does not capture the comprehensive mandate of managing public spending and taxation. Managing the money supply is primarily a goal of monetary policy, which is conducted by central banks. Finally, influencing unemployment is often a result of fiscal policy actions, but the process itself revolves around adjusting public finances rather than directly targeting employment levels.