InvestorQ : study of economic policy
Rawlo preti made post

study of economic policy

Suresh Patil answered.
2 years ago
An economic policy is a course of action with which the behavior of an economy can be controlled or influenced. In general parlance, economic policies are designed and implemented by the government. Economic policies can include various decisions for example- decisions relating to government spending, taxation, the supply of money in the economy, distribution of income, etc.

The factors of economic policy can be segregated into fiscal policy and monetary policy. Fiscal policy deals with the decision taken by the government regarding taxation and spending, whereas, monetary policy deals with central banking actions regarding money supply and interest rates.

Background: Since we are discussing the study of economic policy, it is important to know why the need for economic policy arrived in the first place?

The main and first economic problem was to gain the resources that a government might need to perform its early functions. So, they majorly relied on tax and forced labour for their resources. Soon after the development of money, the first policy choice came. This choice illustrated that a government could raise money through taxation but they also had a choice to increase the money supply by debasing the coinage.

By the 19th century, many other choices developed, and hence the need for economic policy increased. The supply of gold and silver along with other things in different proportions made it important to take decisions.