Impact of Fiscal and Monetary Policy on the Economy

Impact of Fiscal and Monetary Policy on the Economy Fiscal policy is a strategy or tool by which a government adjusts its levels of spending in order to monitor and influence a nation’s economy. The current fiscal policy of the US is also known as government spending policies that influence macroeconomic conditions of the economy. This policy also affects tax rates, interest rates and government spending in order to control the economy. In addition, the current US fiscal policy decisions have a widespread effect on everyday decisions and behavior of individual households and businesses. In addition, fiscal policy of the US has also microeconomic effects on the economy. For example, the fiscal policy influences the taxation and work incentives, pattern of demand, labour productivity and business investment decisions. For example, the US government has introduced a lower starting rate of income tax for lower income earners to provide an incentive for people to work extra hours and keep more of what they earn. The changing tax structure and benefit system also reduce the risk of the ‘poverty trap’ – where households on low incomes see little net financial benefit from supplying extra hours of their labor. Monetary policy is also a structural policy designed by the central bank of the country in order to control the supply of money within the economy. The monetary policies designed by the Federal Reserve System of the US affect the national economy and financial markets. The current monetary policy of the US government influences the effective cost of money and the amount of money that is spend by consumers and businesses. Apart from this, the raising or lowering interest rates also affect people’s and firms’ demand for goods and services. This policy also affects the interest rates, price of production of goods and services, long-term loans and savings deposits. Get business assignment help with We assure you that you will get first class business assignment help services from our experts. You can contact us any time for assignment help. You can send us your e-mail at