Policy-mix
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| This article is part of the series: Finance and Taxation |
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| Taxation | |
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| Income tax · Payroll tax CGT · Stamp duty · LVT Sales tax · VAT · Flat tax Tax, tariff and trade Tax haven |
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| Economic policy | |
| Monetary policy Central bank · Money supply Gold standard |
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| Fiscal policy Spending · Deficit · Debt |
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A policy-mix is a mix between monetary policy and fiscal policy.
Usually, governments and central banks try to get to an optimal policy mix to maximize growth, or minimize unemployment.
The monetary policy is accomplished by the central bank which, by the control of interest rate and the money supply in circulation, avoids inflation. The government, by using the tax option stimulates the economy, decreasing tax and increasing the public investment. The combination of these two policies stimulates growth and generates employment. It should be noted that the effectiveness of this policy depends on the economic reality of a country.
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