As government share in the economy is remarkable, amounting to 50% in some countries, it can have considerable affect to economic activity by carrying out fiscal policy. Fiscal policy can be defined as changes in taxes and government spending in order to achieve economic stability. For example, when there is economic downturn, government could lower taxes or raise public spending which stimulates economic activity and reduces unemployment. When there is economic boom, government could raise taxes or decrease public spending which  curbs economic activity and reduces inflation.

In addition, central bank can implement monetary policy. Monetary policy can be defined as changes in money supply and interest rates in order to achieve economic stability. For example, when there is economic downturn, central bank could increase money supply and decrease interest rates which stimulates economic activity and reduces unemployment. When there is economic boom, central bank could decrease money supply and raise interest rates which  curbs economic activity and reduces inflation. The aim of central bank is usually to achieve price stability. This means that monetary policy usually is addressed to control mainly inflation and unemployment problems are left to fiscal policy.