Help with my Economics report on fiscal policy and monetary policy will be greatly appreciated?

Question

Create a two to three page summary in which you provide an explanation of the difference between fiscal policy and monetary policy.

Provide specific examples of how the government utilizes each type of policy in an attempt to maintain a stable, productive economy. Your explanation of fiscal policy and monetary policy should provide insight into why some economists believe one is more effective than the other. Please address the following questions in your summary:

During the present administration, have the President and Congress raised or lowered taxes?

Based upon the last 20 years, are interest rates presently considered high or low? What is the prime rate?

How would you presently describe the status of the U.S. economy - Prosperity, Recovery, Recession, or Depression?

Your ability to relate this debate to historical events will certainly earn you higher marks on this assignment.

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Does anyone have any resources/links where I can find answers and information?

Answer 1

Hi,

NO GAS- yes we sat in big fat american cars and waited in line for gas;http://en.wikipedia.org/wiki/Image:No_ga...

Fiscal Policy is the spending and taxing policy.

Monetary policy is really what the fed does - rates and liquidity and money supply - think of the fed as the mechanic standing by with the oil can - but sometimes they reach in and wipe away the oil. I think it was Greenspan (maybe Volker) who said the fed;s job was to take away the punch bowl before the party got too wild.

To keep that analogy going - the fiscal policy gang (congress and executive branch plus the sates) are the guys who decide to let you in for free - you can pay later - or you can pay more and maybe decide not to show up. They might also decide that since the fed took away the punch bowl they may need to stepin to by the beer to keep the brewers in business.

This is pretty basic stuff so you should be able to find plenty of info.

One of my favorite places to go for this type of info is actually the federal reserve.

The way the fed works there is the main Board of governors and then a bunch of regional feds. Each has its own special focus. For example the Dallas fed will have a ton on energy, the NY fed on Financial Markets.

If you are looking for a basic overview the fed as a student site:

http://www.federalreserveeducation.org/P...

However I will put some links below that might help, since the fed does not have a totally unified site:

Now to give my two cents:

Taxes have gone down.

Rates are low.

The prime rate used to be a rate that banks offered to their most credit worthy borrowers- it is now just a really used as a base for adjustable consumer loan rates. (such as a credit card at Prime+4%). The prime rate is set by each bank itself - but pretty mucha ll banks have the same rate. Today;s prime rate is 5%

Today's ecomony is either in or at the brink of a recession.

Here is your ace high marks - this is like the mid-70's oil embargo, inflation fears, weak president. In fact we still have trouble with Iran. Just google jimmy carter-oil crisis-iran hostage crisis- Only this time we are in Afganistan and not the russians.