Financial policy refers to the guidelines and strategies that govern how an organization manages its financial resources. This includes decisions about budgeting, spending, and investing to ensure financial stability and growth. Effective financial policies help organizations allocate resources efficiently and achieve their financial goals. In the context of government, financial policy can influence economic conditions through measures like taxation and public spending. For example, a government may adjust its financial policy to stimulate economic growth during a recession by increasing public spending or cutting taxes. These policies aim to create a balanced and sustainable economic environment.