Monetary & Fiscal Policy

The tools the government uses to control aggregate demand
The tools the government uses to control aggregate demand

Many people believe that government can predictably offset economic downturns.  The idea is that government can not only foresee business cycle movements before they occur, but then act to offset the natural tendency of the economy. Many expect the government to step in during recessionary periods. This is fiscal policy. Others look to the Federal Reserve to help manage the economy. This is monetary policy.

Real World Examples

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