Do the fundamental economic goals of fiscal policy differ fr

Do the fundamental economic goals of fiscal policy differ from those of monetary policy? If the Federal Reserve finances the federal government’s deficit, what will happen to the supply of money?

Solution

By, Monetary policy, Federal Bank tries to incentivizing the individuals and businesses to borrow and spend, monetary policy will cause the economy to grow faster than normal. But By Fiscal Policy By increasing taxes, governments pull money out of the economy and slow business activity. So Goal of of fiscal policy can be differ from those of monetary policy.

If the Federal Reserve finances the federal government’s deficit, economic activities increases due to more money supply in order to facilitate transactions.