Presentation TopicPolicy , Fiscal Policy and Monetary Policy

Group Members

o Al Ikhlas Rahman ---------------142-15-3742o Mehnaz Tabassum Moutoshi -------142-15-3587o Faisal Kabir -------------------142-15-3952o Neaz Morshed -------------------142-15-3462o Badhon Roy ---------------------142-15-4087

Overview of our Presentation

What is Policy

Why Does Government Use Policy

What is Fiscal Policy

Tools Of fiscal policy

When Does Government apply Fiscal Policy?

When Does Government apply Monetary Policy?

What is Policy

The actions that governments take in the economic field is called Policy.

Why Does Government Use Policy

Government uses policy in response to economic conditions and to tackle a wide range of issues.

What is Fiscal Policy

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.

Tools Of fiscal policy

Taxation:The first tool is taxation. Taxes provide the major revenue source that funds the government. The downside of taxes is that whatever or whoever is taxed has less income to spend themselves.

Tools Of fiscal policy

Government Spending:The second tool isgovernment spending. That includes subsidies, welfare programs, public works projects and government salaries. Whoever receives the funds has more money to spend. That increases demand and economic growth.

When Does Government apply Fiscal Policy?

Expansionary Fiscal policy If the economy is a bit sluggish and people are not spending very much so that businesses are not growing then the government applies Expansionary Fiscal policy which involves government attempts to increase aggregate demand (AD=C+I+G+X-M). It will involve higher government spending or lower tax and this will lead to higher economic growth.

Expansionary Fiscal policy:

If the economy is doing particularly well and growing significantly the government may be worried that there is a risk of inflation (consistent and persistent increase in price level) so they may want to gently slow down how much people are spending. They can do so by increasing tax level and reducing spending which is called Contractionary Fiscal Policy.

Contractionary Fiscal policy:

What is Monetary Policy

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability.

When Does Government apply Monetary Policy?

A policy by monetary authorities to expand money supply and boost economic activity, mainly by keeping interest rates low to encourage borrowing by companies, individuals and banks.

A Expansionary Monetary Policy

Contractionary Monetary Policy is a form of economic policy used to fight inflation which involves decreasing the money supply in order to increase the interest rate which in turn decreases inflation.

Contractionary monetary policy

THANK YOU