Fiscal Policy And Monetary Policy

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Fiscal Policy vs Monetary Policy Fiscal policy is a way for the government to control the economy financially. The Federal Government sometimes partakes in actions to stimulate the economy. Fiscal Policy focuses on changing government spending, controlling inflation, encouraging economic growth, and to reach full employment. Monetary policy is a policy the Federal Reserve Board enforces which consists of changes in the money supply which influences the interest rates in the economy. This can help control the overall level of spending in the economy. Monetary Policy focuses on achieving and maintaining price-level stability, full employment, and economic growth. There are four different types of fiscal policy including Expansionary, Discretionary, Non-discretionary, and Contractionary. All of these types of Fiscal Policy were created to accomplish different things. Expansionary Fiscal Policy manipulates growth in the economy based off of reduced government spending, rebates, and tax cuts. Discretionary Fiscal Policy is open to new changes in government spending and taxes. Non-discretionary Fiscal Policy cannot be changed and the policy is already set, for example, the government agreement to pay the troops that are already on the job. And lastly, Contractionary Policy is a policy where taxes are raised and the government reduces spending. Fiscal Policy has a few flaws including timing issues. The timing issues occur for a couple different reasons such as the legislative

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