Macroeconomic Policy Tools

Macroeconomic Policy Tools

Monetary and fiscal policies are two tools that are used to manage the economy in attempts to achieve macroeconomic policy goals. Monetary policy is used more frequently to manage the economy because it has a smaller political bias than fiscal policy.

Monetary policy is the management of the nation’s money supply, interest rates, and banking system to promote economic growth, low unemployment, and low inflation.

Fiscal policy is taxing and spending by the government.