Difference between Fiscal Policy and Monetary Policy with its comparison

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In this article we will discuss about Difference between Fiscal Policy and Monetary Policy with its comparison.




FISCAL POLICY




Fiscal policy is a policy used by government to collect revenue and expenditure and it helps to influence economy. Revenue is generated from the taxes whether those taxes are direct or indirect taxes. Fiscal policy alludes to the government’s scheme of taxation, expenditure and various financial operations, to attain the objectives of the economy. Fiscal policy refers to that policy which is administered by Ministry of Finance. Fiscal policy is changed every year according to government rules and regulations. It is an instrument used by government to maintain equilibrium between government receipts by different sources and spending on different projects.

MONETARY POLICY






Monetary policy is mainly concerned with the flow of money in economy. It means changing the interest rate and influence money supply in economy. Monetary policy is mainly controlled by financial institutions like Central bank who manages the flow of money in economy.


It doesn’t change yearly it depends on the economic status and change according to change in economy. It is a policy in which central bank maintain liquidity in economy. Monetary policy helps to manage inflation and reduce unemployment in economy.

 Difference between Fiscal Policy and Monetary Policy with its comparison




BASISFISCAL POLICYMONETARY POLICY


Meaning


Fiscal policy is a policy used by government to collect revenue and expenditure and it helps to influence economy.


Monetary policy is mainly concerned with the flow of money in economy. It means changing the interest rate and influence money supply in economy.


Controlled by


Ministry of Finance


Central bank


Focus on


Its main focus on Economic growth


Its main focus on economic stability


Nature


Fiscal policies changes every year


Monetary policies depend on the change of economy.


Maintains


Government revenue and expenditure


Banks and Credit control


Instruments involves


Tax rates and government spending


Credit ratios and interest rates.



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Concept of Fiscal Policy: Meaning,Types, Objectives and Techniques usedin fiscal policy

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In this article we will discuss about Concept of Fiscal Policy: Meaning,Types, Objectives and Techniques used in fiscal policy.




Fiscal Policy



Fiscal policy is a policy used by government to collect revenue and expenditure and it helps to influence economy. Revenue is generated from the taxes whether those taxes are direct or indirect taxes. Fiscal policy alludes to the government’s scheme of taxation, expenditure and various financial operations, to attain the objectives of the economy. Fiscal policy refers to that policy which is administered by Ministry of Finance. Fiscal policy is changed every year according to government rules and regulations. It is an instrument used by government to maintain equilibrium between government receipts by different sources and spending on different projects.

Types of FISCAL Policy



  1. Expansionary Fiscal Policy: Expansionary fiscal policy refers to that policy in which government reduces taxes and increases spending on public.

  2. Contractionary Fiscal Policy: Contractionary Fiscal Policy refers to that policy in which government increases taxes and reduces public expenditure.

Objectives of Fiscal Policy



  1. It provides employment opportunity: Government helps public by providing them employment opportunity to unemployed people which helps in development of economy. Government fix some amount for generation of employment for unemployed people.

  2. Increase economy development: Fiscal policy is a policy used by government to collect revenue and expenditure and it helps to influence economy.

  3. Maintain price level: Fiscal policy also helps government to maintain price level which helps in development of economy.

  4. Equilibrium in BOP ( Balance of payment): Fiscal policy also helps to maintain equilibrium to Balance of Payment by charging direct or indirect taxes and generation of revenue.

  5. Development of country: Every country has to make fiscal policy which maintain equilibrium and develop economy. With this policy , all work work is done govt. planning and proper use of fund for development functions .

Techniques used in Fiscal Policy are:

  1. Taxation policy

  2. Government Expenditure policy 

  3. Deficit Financing Policy

  4.  Public Debt Policy



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Factors effecting or Components of Business Environment

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In this article we will discuss about Factors effecting or Components of Business Environment.




Business Environment




Business environment means combination of all those external or internal factors which are directly or indirectly effects environment of business organisation. The different organisational factors which effects business environment are Internal and External environment.



  1. Internal factors/Environment: Internal environment/factors consists all those factors which are directly effects business organisation and these factors are consists insides business organisation are

    • Financial factors- Financial factors like financial policies, financial position and capital structure also affects a business performance and its strategies.

    • Policies- It involves policies of the firm should be properly framed taking into consideration the objectives and resources of the firm. It helps to accomplish business objectives.

    • Business objectives-  Objective of the business helps business organisation to influence their business productivity and helps in achieving goals of an organisation.

    • Technology- Use of technology also effect business environment. If the technology is cheap it reduces business growth but if technology is good it increases business growth.

    2.External Factors

    • Customer: Consumer is the king of the market. They are the centers of the business. They are one of the most important factors in the external environment. Customer satisfaction has become more challenging due to globalization.

    • Competition: Competitors can be called the close rivals and in order to survive the competition one has to keep a close look in the market and formulate its policies and strategies as such to face the competition.In market there is different seller with different product and those sellers have competition between them, so there is a market competition between different persons.

    • Suppliers: Suppliers are those persons who provides goods and services and fulfill customers needs it helps business in growth.

    • Market: Market is a place where forces of demand and supply operate, and where buyer and supplier meet together the transactions of goods and services. 

     



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Organizational Context of Decisions

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In this article we will discuss about Organisational context of Decisions: Meaning, Definitions and its importance.






Organizational Context of Decisions




Decision making is an important part in business life. It starts beginning of the business what to do, how to do, and for whom it has been done. It helps business to complete its tasks within given circumstances. It means to choose a best way of doing work which consume less time and work has been done with efficient and effective manner.

Decision making is the process of choosing an alternative or best way under given circumstances.

According to Harold Koontz, “Decision making is a process of selection of a course of action from among alternatives; it is the core of planning”.



According to Richard B. Robinson, “It is a process of choosing a course of action from two or more alternatives”.

Importance of decision making



  1. Better utilization of resources: Resources are the main source of production and those resources are limited. So, organizational decisions helps to use resources for better use and fulfill requirements.

  2. Business growth: Best decisions in organization helps in growth of an organization which helps organization to achieve their common goals with effective use of resources.It helps business to complete its tasks within given circumstances.

  3. Increase efficiency: Decision making is an important part in business life. It starts beginning of the business what to do, how to do, and for whom it has been done and it increases business efficiency.It means to choose a best way of doing work which consume less time and work has been done with efficient and effective manner.

  4. Achieving objectives: Best decisions helps organization to achieve its goals easily and quickly. It helps in selection of suitable course which helps in achieving goal of an organization.Decision-making plays a vital role in management. Decision-making is perhaps the most important component of a manager’s activities which also helps in decision of organisation.

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Responsibilities of Professional Manager in the Process of Directing

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In this article we will discuss about Responsibilities of Professional Manager in the Process of Directing.




RESPONSIBILITIES OF A PROFESSIONAL MANAGER IN THE PROCESS OF Directing: Meaning and steps involved.


Directing



Directing is a process in an organisation which is required at all levels. In directing process managers have to direct their subordinates towards  the objectives of the organisation and its goals. Managers have to select those person who will take properly responsibility and helps organisation to achieve their goal. According to Human, “Directing consists of process or technique by which instruction can be issued and operations can be carried out as originally planned” . So directing is a function which helps in guiding and inspiring subordinates to achieve organisational goals.


Steps involved in Managers responsibility are:



  1. Unity of command: According to the companies act, unity of command means in an organisation there should is one instructor and the subordinates receives order from one director. It helps to avoid confusion and maintain uniformity.

  2. Balance between individual and organisational objectives: Directing is a process in an organisation in which director gives command to their subordinates and it helps to balance between objectives of an organisational and individuals objectives. It also helps in achieving organisational goals.

  3. Effective communication: Directing is a process in which directors directs their subordinates and gives instructions to them. It also helps to maintain effective communication because when command is received one director.

  4. Leading the people: In directing process  process director leads their subordinates and it is a process which helps in influence people and directing them towards achievement of organisational goals. So, it is the most important part in directing process.

  5. Direct supervision: In directing process  manager should supervise their subordinates face-to-face and through directly. It also helps to communicate directly with members who works for organisational goals and takes lesser time to contact with subordinates. 


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RATIO ANALYSIS: Meaning, Definition, Importance/Advantages and Limitations/Disadvantages

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In this article we will discuss about RATIO ANALYSIS: Meaning, Definition, Importance/Advantages and Limitations/Disadvantages.

RATIO ANALYSIS


RATIO ANALYSIS: Meaning, Definition, Importance/Advantages and Limitations/Disadvantages.

Ratio analysis refers to an analytical process in which the financial statements are analyzed. Ratio analysis helps to compare between current performances with previous. It compares the company performance with its other competitors. It is widely used as a powerful tool of financial statement. It helps to examine company performance and to analyses position of company. It also helps to identify and monitor company issues.


Advantages/Importance of Ratio analysis





  1. Analysis of financial position: Ratio analysis is an analytical process which helps to analysis of financial position of business organization.

  2. Comparison of performance: It helps to compare between current performances with previous and helps to ascertain financial statements.

  3. Measurement of operating efficiency: It also helps organization to measure efficiency and helps to identify and monitor company issues.

  4. Inter-firm comparison: This process helps business organization to compare its performance with other organization. The best way of inter-firm comparison is to compare the relevant ratios of the organisation with the average ratios of the industry.

Disadvantages/Limitations of ratio analysis




  1. Historical information: Ratio analysis provides historical information and it is safe as proof but it doesn't effect current  conditions.

  2. Lack of standard of comparison: There is a lack of standard comparison  and no fixed standardize ration laid down from current information.

  3. Ratio analysis explains relationships between past information while users are more concerned about current and future information.

  4. Window dressing: It means an arrangement which present financial statement in such a way which show better position then its actual position. It is a technique used by companies and financial managers to manipulate financial statements and reports to show more favorable results for a period.

  5. Quantitative analysis: In ratio analysis only quantitative ratios are taken but qualitative ratios are ignored in this process.


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