What Are Macroeconomic Policies?
How macroeconomic policy should be implemented is always at the forefront of major political issues, because rival parties tend to be influenced by different schools of thought on how government can best influence the economy.
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Macroeconomics
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Macroeconomics is a sub-discipline within economics which studies functioning of the economy as a whole, including total output, the overall level of employment, inflation, total consumption and savings, and so on.
Applying Knowledge
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Macroeconomic policy focuses on how to apply knowledge gained in macroeconomics to practical government policies to influence the overall economy.
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Monetary Policy
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Monetary policy is a form of macroeconomic policy that tries to influence the economy by manipulating the size of the nation's money supply, typically through using a central bank to alter interest rates.
Keynesian School
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Fiscal policy attempts to influence the economy through the way government taxes and spends it's money. The Keynesian School believes government should use this power to lean against the business cycle, spending more and taxing less during recessions and doing the opposite during economic booms.
Supply-side School
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The supply-side school, on the other hand, proposes that the government assist the economy by passing lower and flatter tax rates and removing what they see as other impediments to economic production.
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