#firstdealoftheyearastylz Fiscal policy refers to the use of government spending and taxation to influence the overall level of economic activity. It is a key tool used by governments to promote economic growth, stability, and prosperity. In this article, we will explore the tools, objectives, and transmission mechanisms of fiscal policy. -Tools of Fiscal Policy The main tools of fiscal policy are: 1. _Government Spending_: The government can increase or decrease its spending on various sectors such as infrastructure, education, and healthcare. 2. _Taxation_: The government can increase or decrease taxes to influence the level of disposable income and aggregate demand. 3. _Transfer Payments_: The government can increase or decrease transfer payments such as unemployment benefits, social security benefits, and subsidies. Objectives of Fiscal Policy_ The main objectives of fiscal policy are: 1. _Economic Growth_: Fiscal policy aims to promote economic growth by increasing aggregate demand and stimulating economic activity. 2. _Full Employment_: Fiscal policy aims to achieve full employment by creating jobs and reducing unemployment. 3. _Price Stability_: Fiscal policy aims to maintain price stability by controlling inflation and preventing deflation. 4. _Income Redistribution_: Fiscal policy aims to redistribute income from the rich to the poor through progressive taxation and transfer payments.