Difference between Monetary Policy and Fiscal Policy

-

Difference between Monetary Policy and Fiscal Policy:-

(1)-

• In Monetary Policy the changes are in interest rate/money supply.

• In Fiscal Policy the changes are in government spending and and tax rate.

(2)-

• Monetary Policy is set by a central bank.

• Fiscal Policy is set by the government.

(3)-

• Target of Monetary Policy is to achieve inflation.

• There is no specific target of Fiscal Policy.

(4)-

• The side effect of Monetary Policy is on exchange rate and housing market.

• In Fiscal Policy the side effect is on government budget/borrowing.

(5)-

• Monetary policy is mostly free from the political process. 

• In Fiscal policy strong political dimension for changing tax rates.

Comments

Post a Comment

Popular posts from this blog

Unemployment : It's types and causes

-
  Unemployment :- It is a situation where a person is able and willing to do work but do not get work at the existing wage rate. Types of Unemployment :- 1- Disguised Unemployment 2- Seasonal Unemployment 3- Open Unemployment 1- Disguised Unemployment :- It refers to a state in which more people are engaged in work than its really need. 2- Seasonal Unemployment :- The Unemployment occurs at certain seasons of the year is known as seasonal unemployment. 3- Open Unemployment :- It refers to that economic phenomenon in which person are able and willing to work at the prevailing wage rate but fail to get work. Causes of Unemployment :- 1- Population Explosion 2- Slow rate of Economic Growth 3- Slow growth of Industries 4- Defective Educational System 5- Lack of Proper Planning.
Read more

Marginal Utility and it's types

-
Marginal Utility:- Marginal utility is the additional utility or satisfaction that a consumer derives by consuming one more unit of a goods or services. Types of Marginal Utility:- There are three main types of marginal utility- 1- Positive Marginal Utility 2- Zero Marginal Utility 3- Negative Marginal Utility 1- Position Marginal Utility:- Position marginal utility is happen when consumer gets additional happiness or joy by consuming one more of an item. E.g.- A man is satisfied after drinking a glass of water but after drinking one more glass of water he gets extra satisfaction. Then, it is positive marginal utility. 2- Zero Marginal Utility:-  Zero Marginal Utility is happen when consumer gets no additional satisfaction by consuming one more of an item. E.g.- A man is approximately satisfied after drinking two glasses of water and after drinking one more glass of water there is no increase in satisfaction. Then, it is zero marginal utility. 3- Negative Marginal Utility:- Negativ...
Read more

Definition of Macroeconomics, Macroeconomic Policy, Targets,Objectives and its Conflicts

-
Macroeconomics :-   Macroeconomics is the branch of economics that studies the behaviour and performance of an economy as a whole. In focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product(GDP) and inflation.    Macroeconomic policy :-   It refers to the instruments by which a government tries to regulate or modify the economic affairs of the country in keeping view with certain objectives. "It attempts to assess the behaviour of the economy as a whole and to seek ways in which its aggregate performance might be improved". ● Policy Targets and Instruments :- •  Targets :- (a)- To achieve full employment at the rate of 3% unemployment. (b)-  To achieve price stability at an annual inflation rate of 5% per annum. (c)- To attain the growth rate of 5% per annum for the economy. ● Objectives of Macroeconomics Policy :- (a)-  Full employment (b)-  Balance of payment (c)-  Price Stability (d)-...
Read more