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Monetary and Fiscal Policy: Regarding Monetary and Fiscal Policy, identify a)which institution(s) conduct monetary policy and...

Monetary and Fiscal Policy: Regarding Monetary and Fiscal Policy, identify a)which institution(s) conduct monetary policy and which institution(s) conduct fiscal policy; b)identify 2 tools of monetary policy and identify 2 tools of fiscal policy; c)explain the goal of loose monetary policy (easy money); d) explain the goal of tight fiscal policy.

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Answer #1

a) The Fed or the federal reserve system conducts the monetary policy in the US and The congress does the fiscal policy.

b) Two tools of monetary policy are Open market operations and reserve ratio. and tolls of fiscal policy are taxes and government expenditure.

c) the goal of the loose monetary policy is to increase the money supply in the market and that will increase the demand and reduce the interest rate.

d) A tight fiscal policy means a higher tax and lower government expenditure. It will decrease the demand and output in the economy.

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