Not to be confused with Political economy. The economic policy of governments covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the labor market, national ownership, and many other what is economic policy pdf of government interventions into the economy.
Most factors of economic policy can be divided into either fiscal policy, which deals with government actions regarding taxation and spending, or monetary policy, which deals with central banking actions regarding the money supply and interest rates. Such policies are often influenced by international institutions like the International Monetary Fund or World Bank as well as political beliefs and the consequent policies of parties. Almost every aspect of government has an important economic component.
Macroeconomic stabilization policy, which attempts to keep the money supply growing at a rate that does not result in excessive inflation, and attempts to smooth out the business cycle. Trade policy, which refers to tariffs, trade agreements and the international institutions that govern them. Stabilization policy attempts to stimulate an economy out of recession or constrain the money supply to prevent excessive inflation.