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Compose a 1250 words assignment on fiscal and monetary policy theories and application. Needs to be plagiarism free! Fiscal policy entails the processes through which the government achieves major economic goals through taxes and government spending. The government collects tax and spends it to achieve economic development. Taxation is one of the key avenues though which governments collect revenues from local and foreign residents. Three main aspects that make up fiscal policy include consumption, investment and government spending. In this sense, the government relies on the three aspects of demand to achieve desired economic goals. The desired economic goals include full employment, price stability, economic growth, and maintenance of a favorable balance of payment, The three aspects add up to determine the equilibrium level of the gross domestic product.