Economics Fiscal Policy Questions
Fiscal policy refers to the use of government spending and taxation to influence the economy. It involves decisions made by the government regarding its budget, such as increasing or decreasing government spending, implementing tax cuts or hikes, and managing public debt. Fiscal policy aims to stabilize the economy, promote economic growth, and address issues like unemployment and inflation.
On the other hand, monetary policy refers to the actions taken by a central bank to control the money supply and interest rates in an economy. It involves decisions made by the central bank, such as adjusting interest rates, buying or selling government securities, and setting reserve requirements for banks. Monetary policy aims to regulate inflation, stabilize prices, and promote economic growth by influencing borrowing costs, investment, and consumer spending.
In summary, the main difference between fiscal policy and monetary policy is that fiscal policy is implemented by the government through changes in spending and taxation, while monetary policy is implemented by the central bank through changes in interest rates and the money supply.