What is the primary goal of using fiscal policy?

The primary goal of using fiscal policy is to influence aggregate demand and stabilize the economy. Fiscal policy involves changes in government spending and tax policies, which are tools used to affect overall economic activity. By increasing or decreasing government spending and adjusting tax rates, the government can directly alter the amount of money available in the economy for consumption and investment.

When the economy is in a downturn, for instance, the government may decide to increase spending or reduce taxes to stimulate demand, encouraging consumer spending and business investment. Conversely, during periods of economic overheating and inflation, the government might reduce spending or increase taxes to cool down the economy. This mechanism allows fiscal policy to play a crucial role in achieving macroeconomic stability by managing business cycles and helping to maintain healthy levels of employment and inflation.

The other options focus on different economic aspects. Controlling the money supply is primarily a function of monetary policy, while regulating international trade concerns trade policies and tariffs. Managing the stock market is not a direct goal of fiscal policy but rather falls under the purview of market forces and investment strategies.