Monetary and Fiscal Policies

Monetary and fiscal policies are elements of economic control that the government uses to balance it. Most often, changes in these policies occur simultaneously to achieve more likely and faster results; however, they can also be used separately for most cases. The U.S. government decisions in 2019 and 2020 demonstrate that the country uses expansionary monetary and fiscal policies to increase economic growth and reduce inflation.

One may note the signs of expansionary monetary and fiscal policies in the Federal Reserve and the White House documents. A decrease in the target range for the federal funds rate to 1-1/2 to 1-3/4 percent indicates an expansionary fiscal policy (The Federal Reserve System). At the same time, raising wages helps keep demand in the market (The White House). Both of these aspects help maintain demand for goods and services, increase the economy’s pace, and suppose reduce inflation (“Monetary and Fiscal Politics”). However, the relevance of such decisions is evaluated differently by representatives of different schools of thought. For example, Monetarists and Keynesians are opposed to monetary and fiscal policies. Keynesians believe that expansionary policies with increased consumption of goods and control of inflation while reducing spending through contractionary policies are the most effective solution (Onoh and Obioma 58). At the same time, monetarists argue that increasing the supply of money is more efficient and reduces the significance of fiscal policy (Onoh and Obioma 58). However, modern politics most often combines the features of both schools of thought.

In conclusion, the current monetary and fiscal policy of the United States is expansionary, which shows documents from the government and banks. The measures taken by the government are aimed at reducing inflation and market support to develop the economy and reduce unemployment. Different schools of thought’ representatives evaluate the success of such a policy differently; however, in general, it is appropriate for the current situation.

Works Cited

“Monetary and Fiscal Policy.” CFA Institute, 2020, Web.

Onoh, John and Obioma, James. “A Comparative Study of Monetary and Keynesian Theories on Inflation and Money Supply in Nigeria.” International Journal of Economics and Financial Management, vol. 2, no. 1, 2017, pp. 56-70.

The White House. Message to the Congress on the 2021 Alternative Plan for Pay Adjustments. 2020.

The Federal Reserve System. Federal Reserve issues FOMC statement. The Federal Open Market Committee, 2019.

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