### 날짜 : 2024-04-15 15:03 ### 주제 : Fiscal policy, monetary policy #economics ---- > Fiscal policy and monetary policy are two main strategies used by governments to manage their economies, each with distinct tools and objectives. **Fiscal Policy**: Fiscal policy involves the government's use of its spending and taxation powers to influence the economy. It is primarily managed by the legislative and executive branches of the government. Key aspects include: - **Government Spending**: Increasing or decreasing public sector spending to influence economic activity. For example, increased infrastructure spending can create jobs and stimulate demand. - **Taxation**: Adjusting tax rates to influence the economic behavior of individuals and businesses. For instance, reducing income tax rates can increase disposable income and boost consumer spending. Fiscal policy aims to manage economic cycles, promote growth, and address unemployment and inflation. It can be described as expansionary (increasing spending or cutting taxes) or contractionary (cutting spending or increasing taxes), depending on the economic conditions and objectives. **Monetary Policy**: Monetary policy is the process by which a central bank, such as the Federal Reserve in the United States, controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency. Key tools include: - **Interest Rates**: Central banks can raise or lower interest rates to control economic growth. Lower rates make borrowing cheaper, potentially boosting spending and investment. - **Open Market Operations**: The buying and selling of government securities in the open market to regulate the money supply. - **Reserve Requirements**: Changing the amount of funds banks are required to hold in reserve, influencing their capacity to create loans. Monetary policy is primarily used to manage inflation and stabilize the currency, but it also influences economic growth rates and levels of employment. Both fiscal and monetary policies are crucial for managing economic stability and growth, but they function through different mechanisms and are controlled by different parts of the government. Their effects can be complementary or contradictory, depending on how they are implemented.