Monetary and Fiscal Policy
Monetary policy is the plan to expand or contract the money supply in order to
influence the cost and availability of credit. Fiscal policy is another tool for the
government basically spending and taxing, or borrowing money. Throughout this essay I
will be writing about these two policies. I will be basically comparing and contrasting
Monetary policy is more along the lines to help the nation?s money supply and
help credit so the economy can gain certain things. Fiscal policy helps control the taking,
borrowing and spending. Monetary policy comes with different plans to help, such as the
easy money supply which helps expand the money supply, it increases aggregate demand,
and promotes economic growth. Tight Money Policy is the higher interest rates and the
Fiscal policy is like missing money. What do I mean by missing money?
Well, when you got your first paycheck at work didn?t you wonder why is your
paycheck so little or less then what you expected? Well that?s what I mean by ?missing
money.? This ?missing money? goes to federal, states, and local governments as taxes.
Another example would be when your purchasing an item and the price tag says $30 and
when the item is registered the total is $32.48. That?s the taxes making the price rise a
In my opinion, what I basically think is that monetary policy goes for the banking
system to achieve money. For example, say that they offer C.D.?s and say I put $3000 in
a C.D at my bank and 6 months later its not $3600. So they borrowed my money to use it
for there needs and than they give it back to me with some interest. Fiscal policy works
more along the lines of taking money out of paychecks and then return them to you when
you file for your income taxes. I think the Federal government thought of a good way on
getting the money they are now receiving, I really have no problem because in the end we
get our money back, or they should return most of our money back at least.