New USG 3.3 Quick Write

The 8 examples below are either of fiscal or monetary policies. After reviewing the phrases, decide which examples could be considered fiscal and which would fall into the monetary examples, then scroll down to answer the questions below.

Drag each word to the drawer of the corresponding concept

Raising Interest Rates

Lowering Interest Rates

Government Spending on Infrastructure

Emergency Relief Programs

Selling Government Securities

Tax Cuts

Increasing Taxes on High Incomes

Open Market Operations

Monetary

Fiscal

Lowering Interest Rates; Raising Interest Rates; Open Market Operations; Selling Government Securities

Government Spending on Infrastructure; Tax Cuts; Increasing Taxes on High Incomes; Emergency Relief Funds

Solution

Fiscal Policy Definition: The government’s use of taxing and spending to influence the economy. Fiscal policy is controlled by Congress and the President to either stimulate the economy or slow it down, depending on the economic conditions.

Monetary Policy Definition: The process by which the central bank (Federal Reserve) controls the money supply and interest rates to influence the economy. This includes tools like setting interest rates and buying or selling government bonds to control inflation or encourage economic growth.