That is how monetary policy sets incentives for households and companies to adjust their behaviour.
Incentives for households, such as a stamp duty discount for homeowners investing in energy efficiency, were suggested.
"Free distributions of imported bednets reduce incentives for households to purchase nets from retailers," said the NAO.
Such a tax credit would encourage homeownership without simultaneously providing more incentives for households to accumulate more debt".
One basic unresolved question is whether monetary policy works by affecting the incentives of financial intermediaries to make loans (the credit channel) or by affecting the incentives for households and nonfinancial firms to save and spend (the money channel).
Hence, while the government intends an 87% reduction in incentives for households to install solar power, it proposes £500m in funding to the base of the Trident nuclear missile programme at Faslane in Scotland.
For instance, a better safety net would help spread the benefits of China's strong economic performance more evenly and reduce the incentives for households to "self-insure" against risks of unemployment by saving more.
Liberal Democrat, Conservative and backbench Labour MPs, along with environmental groups, have been calling for a tariff to offer incentives for households, businesses and communities to generate energy from renewable sources (such as solar, wind or biomass) and feed it back into the national grid.
Charges can also be used to create incentives for households to separate waste before collection, something that is vital if recycling is to become more cost-effective.There was a political kerfuffle when a proposal to this effect by the Cabinet Office was leaked in July and the government appeared to back away from it.
