Question

-Monetary Policy

What is monetary policy? Who conducts monetary policy in the United States? Read the most recent FOMC statement. Did the FOMC increase or decrease interest rates? Explain why the FOMC changed the interest rate and how a change in the interest rate impact the economy as a whole.

-Fiscal Policy

What is fiscal policy? Is the President and Congress currently running expansionary fiscal policy or contractionary fiscal policy? Why?

Answer 1

1)

Monetary policy refers to a policy that affects the cost and availability of credit in the economy. Federal Reserve conducts the monetary policy in the united state.

In the face of COVID-19, the Fed has been trying to reduce the interest rate through increasing the money supply in the economy. Fed is planning to execute the massive quantitative easing programs that would increase the money supply significantly.

Money supply affects the interest rate and interest rate affects the economy. The low-interest rate affects the spending positively, thus Fed is reducing the interest rate thereby causing a rise in the aggregate demand in the economy.

2)

A policy that changes the expenditure and taxes is called fiscal policy. The fiscal policy is conducted by the government. presently the government is pursuing the expansionary fiscal policy. Government is trying to counter the recessionary pressure created by the covid-19.