Economic planning and policy

PROGRAMME: Bachelor of Economics and Finance (BEF TWO)

MODULE CODE: AFU 07325

Facilitator: Mr. Odrano Mwanana

Semester: Three

NTA Level: Seven (7-2)

Academic year: 2019/2020

09/05/2023 Topic 2: by O mwanana 1
 Topic coverage
• Economic Policy overview
• Types of Economic Policy
• Steps for making Economic Policy
• various strategies of policy formulation
• Implement an economic policy

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Economic Policy overview
• Definition
• Economic policy is an attempt to devise government actions and to
design institutions that might improve economic performance.
• Government economic policy, measures by which a government
attempts to influence the economy. The national budget generally
reflects the economic policy of a government, and it is partly through
the budget that the government exercises its three principal methods
of establishing control: the allocative function, the stabilization
function, and the distributive function.

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Steps for Making an Economic Policy:

• (i) Clear statement of goals. There should be clear statement

of economic goals to be achieved.
• (ii) Effects of alternative policies. The second step is to
examine and consider the possible effects of alternative policies
designed to achieve the economic goal. For example, while
considering the merits and demerits of fiscal policy in the
achievement of desired level employment, the altering monetary
policy must remain under examination.

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Steps for Making an Economic Policy:

• (iii) Evaluation. The third step is to evaluate the effectiveness

of the policies. The process of evaluation should be continuous.
If any drawback is found in it at any stage, it should he
improved.

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Types of Economic Policy
• Fiscal policy: Changes in government spending or taxation.
• Monetary policy: Changes in the money supply to alter the interest
rate (usually to influence the rate of inflation).
• Supply-side policy: Attempts to increase the productive capacity of
the economy.

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