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Lecture no. 14 Business Economics (Fiscal Policy (Fiscal policy is the…
Lecture no. 14
Business Economics
Monetary Policy
Monetary policy is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.
Monetary policies can influence the level of unemployment in the economy.
Inflation
Monetary policies can target inflation levels.
Interest rate adjustment
Using its fiscal authority,
Change reserve requirements
Currency exchange rates
Fiscal Policy
Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.
Full employment
ccelerating the rate of economic development
Optimum allocation of resources
Price stability
Equitable distribution of income and wealth
Capital formation and growth
Encouraging investment
Economic stability