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- Monetary policy refers to the actions ofcentral banks to achieve macroeconomicpolicy objectives such as price stability, fullemployment, and stable economic growth.
- I have some questions about monetary and fiscal policy
- Fiscal policy refers to the tax and spending policies of the federal government.
- So who is in-charge of monetary and fiscal policy?
- Well The Federal Reserve is in charge of monetary policy and both the executive and legislative branches of the government is in charge of fiscal policy
- The first monetary policy tool is market operations which is the purchase and sale of securities in the open market by a central bank. The second monetary policy is the discount rate, which can be adjusted up or down as a tool. The next one is reserve requirements, which is a tool used by the central bank to increase or decrease the money supply in the economy and influence interest rates. Now for the two fiscal policy tools. The first one is tax rate. Taxes influence the economy by determining how much money the government has to spend in certain areas and how much money individuals should spend. The next one is government spending, for example if the government is trying the spur consumer spending, it can decrease taxes.
- What are three main monetary policy tools and the two fiscal policy tools? and what do they do
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