Economic policies are tools that governments and central banks use to manage the economy and achieve certain goals. Fiscal policy refers to the way the government manages the money collected from taxes and how it spends that money. Monetary policy is about the way the central bank controls the amount of money in the economy and interest rates. It is important to understand these policies because they affect our daily lives. For example, if the government decides to cut taxes, we may have more money to spend. If the central bank raises interest rates, we may have to pay more for loans. Understanding economic policies helps us understand why certain decisions are made and how those decisions affect us. You can find out everything, including other interesting facts about taxes, in the video above!
