Reflections on Monetary and Fiscal Policy Economics Coursework

Monetary and Fiscal policy
Name
Institutional Affiliation
Monetary and Fiscal policy
I feel that these two are powerful policy tools that a government can use during economic recessions or slumps to regulate economic activity. First, I find monetary policy particularly useful in the short term as the Central Bank can easily change the interest rates and affect the supply of money. Interest rates can be reduced to lower the cost of credit. This situation will drive consumer spending and investment and help increase aggregate demand within an economy. (Stein, 2012). As a result, the inflation rates will be lowered and the economy stabilized.
I think fiscal policy is more effective in the long term. A government can use its taxation and expenditure policies to drive aggregate demand in a slow economy. Increasing government expenditure has the effect of increasing the money supply in the marketplace driving consumer spending and investment. I bel...