Managerial Economics

Chapter 25

Monetary Policy and Fiscal Policy

After studying this chapter, you should be able to understand:

• Macroeconomic policy is the action taken by the government through its different policies to achieve the macroeconomic objectives of the economy.
• Monetary policy is an operation by the monetary authorities of the country, whereas fiscal policy is an operation by the government.
• Monetary policy aims at achieving certain well-defined macroeconomic objectives.
• To achieve the objectives of monetary policy, the central bank has at its disposal the quantitative and the qualitative measures of the monetary policy.
• The effective working of monetary policy is hindered due to the existence of different obstacles.
• Fiscal policy refers to the government’s ...