The Economic Perspective: “Fiscal and Monetary Policy”

Mary:  This is Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at fiscal and monetary policy.  Mike, the federal government has been actively involved in supporting the economy during the coronavirus crisis.  Is there a useful way to classify these policies?

 

Mike: Summary Answer

  • Fiscal policy – uses the federal budget in terms of taxes and spending to influence the economy
  • Operated jointly by the Congress and the President – must have agreement
  • Almost $4 trillion of new spending used
  • Monetary policy – uses Federal Reserve’s influence on interest rates and availability of credit to influence the economy
  • Fed is effectively independent
  • Fed has lowered interest rates and created $4 trillion on new credit
  • I’m MW

 

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.