What is a policy?

1 Answer
May 18, 2015

In Economics, it's a compound of measures realting to a specific area, which are taken to change, improve or restrain economic variables (or aggregates, in Macroeconomic terms).

The economic policies, which are carried out by the public sector's (i.e. the government and its agencies and state-owned companies) competent agents, can be: fiscal, monetary, foreign (in economic terms!).

Fiscal economic policies aim at taxation and government expenditures. Monetary economic policies deal with the supply/demand for money, bons and its related variables. Foreign economic policy deals more with exchange rate and imports/exports of goods and services.

It is of sheer importance to know how, why and when each policy is useful and to what degree it's useful.