Explain how implementation of fiscal policies and monetary policies can both be utilized to increase consumer and business spending and spur economic growth. Which of these policies will impact the federal budget and how?(4 points) explain in 4 sentences

Answer 1

Implementation of fiscal policies involves government spending and taxation. By decreasing taxes or increasing government spending, individuals and businesses have more money to spend, thereby increasing consumer and business spending. This increased spending fuels economic growth. On the other hand, implementation of monetary policies involves actions taken by the central bank to influence interest rates and the money supply. By decreasing interest rates or increasing the money supply, borrowing becomes cheaper, incentivizing individuals and businesses to spend and invest more. Both policies can impact the federal budget as fiscal policies involve changes in government spending and taxation, which can alter revenue and expenditure patterns, while monetary policies can impact interest rates and inflation, both of which can affect government borrowing costs and overall budgetary requirements.