The macroeconomic policy of the state is actions that are aimed at regulating economic processes in order to maintain economic growth , they are designed to limit inflation and ensure full employment. The main objective of macroeconomic policy is to balance unemployment and inflation.
Fiscal Macroeconomic Policy
In another way, this type of policy is called financial or budget. It applies to the main elements of the state treasury and is directly related to taxes, the budget, cash receipts and expenditures of the state. In market conditions, this policy is the basis of economic policy. This category includes budgetary, tax, and also the policy of expenses and incomes.
The most important task of fiscal policy is to find ways and sources of forming the state’s monetary funds, as well as funds that will contribute to the achievement of the goals of economic policy. Thanks to the implementation of fiscal policy, government bodies can regulate global processes of an economic nature in the country, maintain the stability of money circulation, finances, provide financing for the public sector, and contribute to the better use of scientific, technical, industrial and economic potential. With the help of fiscal policy instruments, the state can influence the aggregate supply or demand, thereby influencing the economic situation, take anti-crisis measures.
Monetary Monetary Policy
This policy is designed to regulate the money supply and circulation in the state through direct independent influence or through a central bank. It affects not only money, but also prices.
The purpose of monetary policy is stabilization, increasing the stability and efficiency of the entire economic system, providing employment, overcoming the crisis and economic growth. In contrast to fiscal monetary policy, macroeconomic policy has a narrower specialization and is limited only by stabilization of money circulation.
The objectives of this policy are to suppress inflation, stabilize prices, exchange rates, purchasing power, regulate the money supply, supply and demand of money using the banking system.
Monetary policy is tough when there is a contraction in the money supply, emission restrictions, and high interest rates on loans are maintained. Softness is a policy aimed at increasing the mass of money or not hindering this process, helping to obtain cheap loans.
Macroeconomic policy in an open economy
Fiscal and monetary policies are the backbone of the state’s economic policy. However, there are other categories.
Structural and investment policy affects the formation and change of the regional and industrial production structure of the country. It affects the ratio, the proportion of production of various products of the industry. The manifestations of this policy are agrarian and industrial policies.
Social policy focuses primarily on the social protection of people, on ensuring the basic needs of the population, on maintaining decent living conditions, and it is also involved in environmental protection. Next to this policy is the policy of employment, regulation of wages and incomes.
Foreign trade policy, which applies to economic relations with other states, deserves attention.