Macroeconomic Stabilization Policy
Stabilization policy attempts to stimulate an economy out of recession or constrain the money supply to prevent excessive inflation.
- Fiscal policy, often tied to Keynesian economics, uses government spending and taxes to guide the economy.
- Fiscal stance: The size of the deficit or surplus
- Tax policy: The taxes used to collect government income.
- Government spending on just about any area of government
- Monetary policy controls the value of currency by lowering the supply of money to control inflation and raising it to stimulate economic growth. It is concerned with the amount of money in circulation and, consequently, interest rates and inflation.
- Interest rates, if set by the Government
- Incomes policies and price controls that aim at imposing non-monetary controls on inflation
- Reserve requirements which affect the money multiplier
Read more about this topic: Economic Policy
Famous quotes containing the word policy:
“While I am in favor of the Government promptly enforcing the laws for the present, defending the forts and collecting the revenue, I am not in favor of a war policy with a view to the conquest of any of the slave States; except such as are needed to give us a good boundary. If Maryland attempts to go off, suppress her in order to save the Potomac and the District of Columbia. Cut a piece off of western Virginia and keep Missouri and all the Territories.”
—Rutherford Birchard Hayes (1822–1893)