What is the primary goal of financial policy?

The primary goal is to foster economic stability, achieve sustainable growth, control inflation, and maintain high employment levels within an economy.

What are the two main types of financial policy?

The two main types are fiscal policy, involving government spending and taxation, and monetary policy, managed by central banks to control money supply and interest rates.

How does fiscal policy influence the economy?

Fiscal policy influences the economy by stimulating or slowing demand through changes in government spending (e.g., infrastructure projects) and taxation (e.g., tax cuts or hikes).

What role do central banks play in financial policy?

Central banks implement monetary policy, using tools like interest rate adjustments, quantitative easing, and reserve requirements to manage inflation, money supply, and overall financial stability.

How does financial policy affect individuals?

Financial policy impacts individuals through interest rates on loans and savings, employment levels, inflation affecting purchasing power, and taxation influencing disposable income and investments.