Fiscal Policy and Monetary Policy

Monetary policy is the macroeconomic policy laid down by the central bank of the country which involves management of interest rate and money supply and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity. On the other hand, Fiscal policy is a method through which government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.

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