Comparison between Fiscal Policy and Monetary Policy

Fiscal Policy Monetary Policy
Principle:Manipulating the level of aggregate demand in the economy to achieve economic objectives of price stability, full employment, and economic growth.Manipulating the supply of money to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment.

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Fiscal Policy Monetary Policy
Definition:Fiscal policy is the use of government expenditure and revenue collection to influence the economy.Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.
Policy Tools:Taxes; amount of government spendingInterest rates; reserve requirements; currency peg; discount window; quantitative easing; open market operations; signalling
Policy-maker:Government (e.g. U.S. Congress, Treasury Secretary)Central Bank (e.g. U.S. Federal Reserve)

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