Government Economic Policies: Fiscal and Monetary

What you'll learn

How governments manage the economy.

Key ideas

• Fiscal policy (tax and spending) vs monetary policy (interest rates).
• Direct (income) vs indirect (VAT) taxes.
• Budget deficits; expansionary vs contractionary policy; supply-side policies.

Exam tips

• Distinguish fiscal from monetary policy.
• Explain how interest rates affect the economy.

Common mistakes

• Confusing fiscal and monetary policy.
• Mixing up direct and indirect taxes.