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The main policy tools

The main policy tools

Governments manage the economy using fiscal, monetary and supply-side policies. Fiscal policy changes government spending, taxation and transfers to influence aggregate demand, output, income and disposable income. Monetary policy changes interest rates and the money supply.

2.3 How the government manages the economy Lesson

  1. GCSE
  2. /Economics
  3. /2.3 How the government manages the economy

Step-by-step lessons on AQA GCSE Economics 2.3 How the government manages the economy, covering 2.3.1a Fiscal policy and income and expenditure, 2.3.1b Fiscal policy and government objectives, 2.3.1c The government budget, 2.3.2a The meaning of monetary policy, 2.3.2b Uses of monetary policy, 2.3.3a Supply-side policies and their trade-offs, 2.3.3b Using supply-side policies, and 2.3.4 Policies to correct positive and negative externalities. Each one builds up to exam-style questions. Build a solid grasp of supply and demand and cost/revenue calculations before tackling the evaluation-heavy policy topics.

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