Question

what is monetary policy and fiscal policy?

Answer 1

Monetary policy is the part of economic policy of government which is formulated and executed by the federal bank.It influence the supply of money,rate of interest, credit policy and create favourable environment for saving and investment.

Its objectives is to maintain the price stability or control over the inflation and can expanding or contracting Money supply according to the needs of the economy.It make available credit for the economic growth of the country and to promote saving and investment.

Fiscal policy is the part of the economic policy of the government which is related to the government income and expenditure.It is a policy under which government uses its expenditure and revenue programme to produce desirable effect on national income, production and employees.

Objective of fiscal policy is to remove poverty and unemployment , optimum utilises of resources,to reduce economic inequality,to promote capital formation so that to achieve economic stability.