What is the difference between fiscal&monetary policy?
One of the functions of government is to facilitate a healthy economy. Its two most effective tools for the task are fiscal policy and monetary policy. The two terms are often confused, but in fact they refer to separate mechanisms.Fiscal PolicyFiscal policy concerns taxation and government spending. It allows the government to stimulate the economy directly, by spending money and buying goods and services from the private sector.It moderates the book and bust cycle of the economy, controls inflation, and to boosts the economy in a recession.Fiscal GoalsAn expansionary fiscal policy increases aggregate demand through government spending and cutting taxes. A deflationary policy will lower the government deficit through increasing taxes and cutting spending.Monetary PolicyMonetary policy concerns the amount of money available. More money means more spending.Monetary ToolsWhen the government lowers interest rates, the cost of borrowing falls. Business and the public are likely to borrow a
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