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  • Kelsie Steppick
  • Mrs. Smith, what's the difference between fiscal and monetary policy?
  • Fiscal policy is concerned with taxes and government spending and is used by the government. 
  • Monetary policy is mainly concerned with interest rates and the amount of money in circulation and is mainly used by banks, or the Fed. 
  • The Texas economy is currently in expansion. The interest rates are low, and the home sales and the loan demand is up. 
  • How does that affect the economy?
  • And recently, the Fed has cut the target interest rates down .25%, which creates more money for consumers 
  • This is good for Texas because this will help create more expansion 
  • The Government's actions also affect the economy of the whole country
  • The government is currently making tax breaks and spending more, which will create more money to be spent, and help make the US economy better, although this could lead to a higher rate of inflation
  • But don't the actions of the government and the Fed contradict each other?
  • Surprisingly, no, they both are focusing on expanding the economy.
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