Monetary Policy And Fiscal Policy

1178 Words May 17th, 2016 5 Pages
The United States is best described as a mixed economy. A mixed economy is when the government is not in charge of the economy, but is still majorly involved in economic decisions. The government plays a critical role in providing economic conditions where the marketplace can function effectively. Any decisions made are in order to either maintain the market or stabilize the economy during a financial crisis. Monetary policy and fiscal policy are two tools by which government uses to guide the economy. Sometimes the economy is challenged with both inflation and unemployment at high rates. Macroeconomics breaks down the entire economy and the issues affecting it, including inflation, unemployment, economic growth, and monetary and fiscal policy. A country has to come up with good macroeconomic policies in order to better their economy. This paper will discuss the government 's policies adopt to stabilization such as momentary and fiscal policies in order to minimize it from occurring. In economic terms, a recession is defined as a slowdown in economic activity. Efforts to move the economy out of a recession, the government would utilize expansionary economic policies. One action the government would take would include conducting an expansionary fiscal policy and the other would be to conduct an expansionary monetary policy. Both of these actions would affect things such as interest rates, money supply, spending, GDP, aggregate demand, and employment. Expansionary fiscal…

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