MONETARY AND FISCAL POLICY

1. Monetary And Fiscal Policy
Inzimam Karim
Ali Asad Khan
Ejaz Hussain
Haris Qureshi

3. Monetary policy
• Changes in taxes and to stabilize the
economy (to achieve particular economic
goals, such as low unemployment, price
stability, and economic growth.)
• Budget Deficit The difference between
what a government spends and what it
collects in taxes in a given period: G − T.

4. Objectives of monetary policy
• Neutrality of money
• Stability of exchange rates
• Price stability
• Full Employment
• Economic Growth
• Equilibrium in the Balance of Payments.

5. Fiscal Policy
• Means by which a government adjusts its
spending levels and tax rates to monitor and
influence a nation's economy.

9. Difference between monetary and
fiscal policy
• Monetary policy involves changing the interest
rate and influencing the money supply
• Fiscal policy involves the government
changing tax rates and levels of government
spending to influence aggregate demand in the
economy

13. Expenditures
• Types of expenditures:
• Developmental/Capital Expenditures
• Non developmental/Current
Expenditures.

14. Developmental Expenditures
• Includes day to day Expenditures:
• Defense
• Economic community and social services
• Maintenance of Law and order
• General administrator
• Debt Services
• Government services

15. Taxes
• Types of Taxes:
• Direct Taxes
• Indirect taxes

16. Direct Taxes
• A direct tax is paid directly by an
individual or organization to an
imposing entity. A taxpayer, for
example, pays direct taxes to the
government.

17. Types of direct taxes
• Income tax (20%)
• Property tax
• Corporate tax (33%)
• Wealth tax

18. Indirect taxes
• A tax levied on goods and services
rather than on income or profits.

19. Types of indirect taxes
• Sales tax
• Custom duty tax
• Excise duty

20. Non tax revenue
• Income form property and enterprise
• Profit from post office and telegram
• Trading profit
• Interest receipt
• Surcharges