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DEMAND MANAGEMENT (demand-side policies), the set of official policies…

- - - - profits of government owned businesses
      - indirect taxes on expenditure goods and tariffs on imports
      - firms
        
        taxes
        
        social security payments
      - households
        
        social security payments
        
        taxes
    - - Inability to achieve specific targets
      - Crowding-out effect
      - The effect on net export
      - Sustainable debt
      - Political pressure
      - Time lags
    - - contractionary(deflationary) :explode:
        
        Used to decrease aggregate demand
        
        increasing taxes
        
        decreasing government spending
      - expansionary :<3:
        
        used to increase aggregate demand
        
        indirectly: decreasing taxes
        
        CIT: Investment
        
        PIT: Consumption
        
        directly: increasing government spending (G)
    - - Public spending (direct)
        
        Transfer payments
        
        Current expenditure
        
        Capital expenditures
      - Manipulating taxes (indirect)
    - - to achieve an external balance between export revenue and import expenditure
      - to promote an equitable distribution of income
      - to reduce fluctuations in the business cicle
      - a stable economic environment for long-term growth
      - a low unemployment rate
      - the maintenance of a low and stable income
    - - effective in the long run while dealing with a deep recession
      - may be used only to target the specific sectors of economy
- - - - modifying minimum reserve requirements
      - open market operations(issuing bonds)
    - - changes in the minimum lending rate (the base rate)
      - quantitative easing (introducing new money to the supply)