Summary

Fiscal Policy is the use of government expenditure and taxation to influence the level of inflation / economic growth

Government expenditure covers all things the public sector spends money on

Taxation earns revenue for the government either directly through income taxes or indirectly through VAT

Monetary Policy is the control of the economy through interest rates, money supply and exchange rates

The Bank of England set the rate of interest in the UK

The government uses interest rates to control the rate of inflation around its target of 2.5%

Supply side policies aim to increase productivity in the economy therefore stimulating economic growth