There is no one-size-fits-all answer for the best Fiscal Policy, as it depends on the country's unique economic conditions. However, in general, a government should use fiscal policy to try to achieve three main goals: stabilize prices, promote economic growth, and maintain low levels of unemployment.One way to achieve price stability is by using expansionary fiscal policy during times of recession and contractionary fiscal policy during times of inflation. This can help keep prices from swinging too far in either direction. To promote economic growth, a government may choose to increase spending or reduce taxes when there is slack in the economy (i.e., when GDP is below potential GDP).This will increase demand and spur businesses to invest and hire more workers. Finally, governments can use taxation and spending policies to influence unemployment rates; for example, increasing government spending or cutting taxes will create jobs and decrease unemployment rates.
