Monetary Policy and Fiscal Policy Writing Assignment

Macro Economics Essay
Monetary Policy and Fiscal Policy
The government and policy makers ought to make the countries conducive for business, support growth and development while tackling employment. Monetary and fiscal policies are adopted to achieve these objectives, but there are different schools of thoughts on what are the most appropriate policies to improve the people’s standards of living in the long-term. Monetary policy is the economic policies and tools to controls monetary factors to guarantee price stability and economic growth whereby the Federal Reserve takes actions to adjust the money market. The Fed is the monetary authority in the US just like central banks in other countries, which makes policies to control inflation, reduce unemployment, achieve economic growth and improve the balance of payments balance. Fiscal policy are the tools and instruments used to support growth, reduce unemployment and achieve price stability through taxation and public spending in order to obtain growth in production, reduce unemployment and achieve price stability
Expansionary monetary policy consists of increasing the amount of money in the country to stimulate investment and thereby reduce unemployment and achieve economic growth, and the policy usually causes inflation. The contractionary (restrictive) monetary policy mainly focuses on constraining money supply to reduce inflation. When these policies are applied, there is a risk of slo...