Explain Fiscal policy and Monetary policy

Expert Solution

Fiscal policy is a policy related collection of taxes by the government and use of taxes as public expenditure by the government and these policies will be determined which will be constantly changing the rate of income tax & It will be applicable to various individual and other organisations and it will also try to expand those tax collected by the government in proper manner so that there will be focus upon higher equality between various sections of society and it will be focusing upon elimination of the disparity of the income.

Monetary policy is a policy which is set by the central bank of a country which will be focusing upon managing the money flow in the economy and it will always be focusing upon stabilizing the economy by adopting various quantitative tightening and quantitative easing tools in order to control the flow of money or stimulate the flow of money so it can use tools like interest rates along with setting the Reserve requirement ratio so that adequate amount of monetary flow is always established in the economy.

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