The three main types of government macroeconomic policies are fiscal policy, monetary policy and supply-side policies. 1. Fiscal Policy: Fiscal policy refers to changes in government expenditure and taxation. Government expenditure, also called public expenditure, and taxation occur at two main levels – national and local. Governments spend money on a variety of items including benefits (for the retired, unemployed and disabled), education, health care, transport, defense and interest on national debt. Importance: Fiscal policy in India is the guiding force that helps the government decide how much money it should spend to support the economic activity, and how much revenue it must earn from the system, to keep the wheels of the economy running smoothly. In recent times, the importance of fiscal policy has been increasing to achieve economic growth swiftly, both in India and across the world. Through the fiscal policy, t...
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