Fiscal Policy And Monetary Policy - 1735 Words

We the government have to find a better way to spend the economic money better to improve our situation. Looking at the two expansionary which is fiscal and monetary policy to find out a way to find the economic. It is macroeconomic policy that pursues to enlarge the money supply to boost economic growth or combat inflation. One of the form is fiscal policy of expansionary policy, which comes in the method of tax cuts, discounts and increased government spending. Expansionary policies do come from central banks, which focus on cumulative the money supply in the economy. Now let look at the break down of expansionary policy which deal with the fiscal policy and monetary policy. The U.S. Federal Reserve pays expansionary policies whenever it†¦show more content†¦In the book it say: Discretionary fiscal policy is the intentional use of taxing or government spending to affect the level of output, employment, and prices. Even if governments change their levels of spending or taxe s for other reasons, policy makers are very conscious of the effects these actions will have on output, employment, and the price level. Most economists in the classical tradition consider fiscal policy to be of limited benefit, sometimes even harmful (Amacher, 2012). Fiscal policy can be used in direction to both stimulate an inactive economy or to slow down an economy that is developing at a rate that is getting out of control, which have a potential to lead to inflation or advantage. Fiscal policy openly touches the aggregate demand of an economy. Reminiscence that aggregate demand is the entire number of final goods and services in an economy, which contain consumption, investment, government spending, and net exports. For example: Aggregate Demand = Consumption + Investment + Government Spending + Net Exports. Fiscal policy has a result on each of these groups. There are two types of fiscal policy which are expansionary and contractionary. When our economy is in a recession, expansionary fiscal policy is in effect. Normally this kind of fiscal policy consequences in enlarged government spending and/or inferior taxes. A recession consequences in a recessionary hole which mean that aggregate