Difference Between Fiscal And Monetary Policy Essay

There are many policies that are enacted continuously that stimulate the economy in the United States. Some of these policies stimulate the U.S. economy in a negative way and some stimulate it in a positive way. One would agree that the U.S. economy is forever changing due to various factors. Some of these economic policies are also developed due to various factors or events that may have occurred in the United States. This paper will discuss some policies that stimulate the economy, their relation to aggregate supply and demand, and the effectiveness of stimulation these policies will have on the economy. The article â€Å"What is the difference between fiscal and monetary policy?† written by Dr. Econ and posted on the Federal Reserve Bank of San Francisco website. Even though the article was written in March of 2002, it is still relevant in providing some basic knowledge of the policies that effect the economy of the United States. This article provided basic informati on about the distinction between monetary and fiscal policies. One would agree that everyone does not know how the economy is stimulated. A central bank typically implements monetary policy and fiscal policy decisions are made the national government (Econ, 2002). The article introduced two types of monetary policy. The restrictive monetary policy is implemented to slow down the future economy to offset the pressures from inflation. The simulative monetary policy is implemented with the expectation toShow MoreRelatedDifference Between Monetary And Fiscal Policy923 Words   |  4 Pages1. Explain the difference between monetary and fiscal policy. Answer: Monetary Policy: It helps to limit the flow of money in order to reduce problems of unemployment, inflation and to stabilize business cycle. Interest rates are controlled to promote overall economic growth. 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