A normative counterpart of macroeconomic theory aimed at assessment of the state of the economy and prescription of practical ways of improving its performance. Typical policy objectives of a government, or a central planner, are economic growth, price stability, and full employment of the labour force, and policy tools include fiscal policy (taxation and government spending), monetary policy (regulation of money supply and interest rates), debt management policy (trade in government securities), and sometimes prices and incomes policy (regulated prices and minimum wage).
Reference: Oxford Press Dictonary of Economics, 5th edt.
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