ABSTRACT
In this essay economic policy is defined to encompass all government actions which affect individuals’ welfare and, given it can be defined, the welfare of society. Welfare depends on the kinds and quantities of goods and services people consume, including environmental goods such as air, water and noise. Economic policy refers to government decisions which affect the allocation and distribution of resources. The key instruments are legislation, government expenditure, and its financing by taxation, borrowing or issuing money (Levacic 1987: chapter 1).
