Econ: Fiscal and Monetary Policies



The federal government uses monetary and fiscal policies to stabilize and keep the economy healthy. Monetarists believe that fiscal policy is not as important as monetary policy, which addresses how the Fed controls the rate of growth of the money supply. Supporters of monetary theory believe that the Fed should increase the money supply at a smooth rate each year. Monetarists believe that the main problem with fiscal policy is that it cannot be implemented effectively.

Power of Money: Fed’s monetary policy responsibility, using the Fed’s response to inflation of the late 1970s as a case study.

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