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Price: 2000 Naira CHAPTER ONE INTRODUCTION 1.1 Background of the Study The use of economic policy as tool for economic stabilization by governments of different economies of the world cannot be overemphasized. Some of these policy measures may have economic-wide effect (e.g. the budget and inflation) while others may have specific effects such as the consumption tax on consumer good (Killick, 1981 and Black, Calitz, Steenekamp, Ajam, 2000). Policymakers around the world employ various policies, singly or mix, to stabilize the boom-bust cyclical swings of economic activities. In macroeconomic management, the two most commonly employed policies are the fiscal and monetary policies. The Monetary policy, managed by the Central Bank, is conducted through changes in the money supply and interest rate. While the Fiscal policy, which is managed by the government of that economy, is conducted through changes in government spending and taxes (Liborio, 2011; Hussain, Wijeweera and Hoang, 20...