Fiscal policy refers to government actions involving taxation and spending to influence economic activity. Its main objectives are economic growth, price stability, full employment, and income redistribution.

One primary goal is economic growth. By adjusting spending and taxation, governments stimulate demand, encourage investment, and boost productivity. Expansionary fiscal policy, such as increased public spending and tax cuts, helps drive economic activity, while contractionary measures can prevent overheating.

Price stability is another key objective. Fiscal policy helps control inflation by reducing excessive demand through higher taxes or lower government spending. This prevents rapid price increases, preserving the purchasing power of consumers.

Ensuring full employment is also crucial. Governments use fiscal policy to create jobs by investing in infrastructure, providing subsidies to businesses, or reducing taxes to increase hiring. During economic downturns, increased spending can stimulate demand and lower unemployment rates.

Income redistribution is aimed at reducing economic inequality. Progressive taxation and welfare programs help support lower-income groups, ensuring a more balanced distribution of wealth.

By achieving these objectives, fiscal policy promotes long-term economic stability and social well-being. However, it must be carefully managed to avoid excessive debt and unintended economic consequences.