Sort the following items into boxes based on whether they ar

Sort the following items into boxes based on whether they are examples of monetary or fiscal policy.

Solution

Fiscal policy is the government\'s policy to change aggregate demand using government spending or taxation as tools. Monetary policy aims at change in money supply by Fed, by changing interest rates or reserve ratio.

Fiscal policy examples are:

- Construct monuments

- Increase tax

- Increase education spending

- Decrease tax

- Cut infrastructure spending

Monetary policy examples are:

- Decrease interest rate

- Increase interest rate

- Increase money supply