Monetary vs fiscal

Monetary vs fiscal

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  • The difference between fiscal and monetary policies is fiscal policy is controlled by the government and they use taxes and spending  Monetary policies is controlled by the fed and uses RRR, discount rate, and open market.
  • Government spending is increasing, which increases prices. The new tax code is making it where people have more money which is also increasing spending, which also causes the prices to go up.  This causes the economy to be in the expansionary phase. 
  • Currently the Texas economy is doing good, manufacturing and retail is increasing, although there is a shortage in labor and the home sales is down. 
  • On a bigger scale the US economy is also good, the economic activity is increasing and unemployment in decreasing also the Federal Funds Rate is increase because of inflation. 
  • Because of the act by the Fed with concern with the US economy it is also causing inflation within the Texas economy. 
  • In conclusion the Fed or monetary policy and the government or fiscal policy are contradict each other and we will just have to see whose works above the other. 
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