| 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 spending | Interest 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) |