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What's the Difference Between Monetary and Fiscal Policy?

Video Credit: The Street - Duration: 01:15s - Published
What's the Difference Between Monetary and Fiscal Policy?

What's the Difference Between Monetary and Fiscal Policy?

Monetary and fiscal ... So what is the difference?

Well, they're both used by governments to quell economic growth if there are economic excesses, or spur growth if there isn't enough of it.

Most of the quelling is done through monetary policy.

Let's get into it.

Do you know when interest rates go down and your credit card debt becomes less expensive, and you spend a little more money, or that house you've wanted becomes easier to finance with mortgage debt?

When the Federal Reserve influences interest rates, that influences the economy.

Lower rates is a stimulant.

That's monetary policy.

Okay, here's what fiscal policy is: With a lower tax rate, you have more money to spend.

That's fiscal policy.

It's related to taxes.

Want to see how all of this impacts companies?

Watch the video above to see.

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