Monetary Policy vs. Fiscal Policy


 

Monetary Policy vs. Fiscal Policy

  • Monetary policy is enacted by a central bank to sustain a level economy and keep unemployment low, protect the value of the currency, and maintain economic growth. By manipulating interest rates or reserve requirements, or through open market operations, a central bank affects borrowing, spending, and savings rates.

  • Fiscal Policy  is an additional tool used by governments and not central banks. While the Federal Reserve can influence the supply of money in the economy and impact Market Sentiment, The U.S. Treasury Department can create new money and implement new tax policies.

It sends money, directly or indirectly, into the economy to increase spending and spur growth.

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