The government establishes public sector organizations to ensure that the required services are rendered to the public. The primary functions of public sectors are to promote the overall economic growth and regulate economic activities. There are various policies regulated by the federal government to control the economy. Some of them are property rights law, encouraging competition among business, maintaining public services, establishing economic institutions, provide safety, etc. Stability is another important objective of public sectors. They have strong fiscal and monetary policies to bring in the balance during the volatility of the economy. The economy as a whole is very versatile. It consists of a large number of components of trading.
Fiscal policy refers to periodic modification in tax slabs and stimulating spending programmes. These policies are implemented concerning to expand aggregate demand by taking care of deficits during recession.
Monetary policy is solely controlled and operated by the nation’s central banking system to promote sustainable growth in the economy by regulating money supply in the market. Balanced increase or decrease of money circulation in the market is the sole because of this policy. It is further categorized into expansionary and contractionary monetary policies. Expansionary policy is implemented during recession and contractionary policy is implemented during inflation to have a stable circulation of money in the economy.
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