What is fiscal stimulus aimed at?

Fiscal stimulus refers to the use of government spending and tax policies to influence economic activity, especially during periods of economic downturn or recession. The primary objective of fiscal stimulus is to boost economic activity by increasing aggregate demand. This can be achieved through various means such as increasing public spending on infrastructure projects, providing direct financial assistance to individuals, or cutting taxes to encourage consumer spending and investment.

In times of economic stagnation, such measures are designed to energize the economy by creating jobs, enhancing consumer confidence, and ultimately stimulating growth. By injecting money into the economy, fiscal stimulus aims to reduce unemployment and promote an overall increase in economic output. Therefore, focusing on boosting economic activity is the central goal of fiscal stimulus.