Compare and contrast monetary and fiscal policy in terms of their decision (administrative) and impact (operat
Compare and contrast monetary and fiscal policy in terms of their decision (administrative) and impact (operational) lags.
- bob135Lv 41 decade agoFavorite Answer
Monetary policy has less decision and operational lag, since it is decided by an appointed body not elected officials, and since money supply very quickly and very directly effects the interest rate.
Fiscal policy is slower administratively because it has to go through congress, and has slower impact because people take more time to react to additional income resulting from increased government spending.
- SheilaLv 45 years ago
Fiscal Policy: Is the policy of the government to control the economy using their revenue and spending. For example, if the economy is not going well and there is less economy activity, then the government will spend more to activate the econmy (in public projects, etc) or maybe the government can rise or reduce the taxes (if government reduce taxes people will spend more because they are going to have much money, and that will activate economy). Monetary Policy: Is the instrument that government use to maintain the market in order. Like inflation, interest rates, the exchange rate. The principal instrument is the amount of money.