1
$\begingroup$

As far as I can make out, in 2010 the UK government simultaneously started an austerity program which cut public spending, taking money out of the economy, while also enacting a quantitative easing program which injected hundreds of billions of pounds into the economy.

How can these two seemingly conflicting programs exist at the same time?

$\endgroup$
  • $\begingroup$ This question appears to be off topic because it is based on the (rather bizarre) misconception that fiscal policy directly affects the money supply. $\endgroup$ – Steven Landsburg Jan 15 '15 at 23:27
2
$\begingroup$

The division comes from the entities guiding these sets of policies.

The austerity program falls under fiscal policy, which is controlled by Parliament. Quantitative easing falls under monetary policy, which is controlled by the Bank of England. The policies enacted by these two entities are not necessarily coordinated, and can sometimes work opposite each other's objective.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.