Monetary Policy & Fiscal Policy

Introduction Since the Great depression of the 1930s, national governments have held a central role in guaranteeing economic growth, employment, and price stability However, besides policies, the day-to-day operations of governments, consumers, and businesses alike have a major impact on the current account and exchange rates

Two Categories of Macroeconomic Policies Fiscal policy: government taxation and expenditures; usually formulated by the legislative and executive branches Monetary policy: money supply and interest rates; usually formulated by the central bank.