| Definition |
Government actions aimed at influencing the economy through fiscal measures like taxation and spending. |
Central bank actions to control money supply and interest rates to influence the economy. |
| Implemented By |
Government (finance ministry, treasury). |
Central bank (e.g., Federal Reserve, RBI). |
| Main Tools |
Taxation, government spending, subsidies, regulations. |
Open market operations, interest rate adjustments, reserve requirements. |
| Objectives |
Promote economic growth, reduce unemployment, manage inflation, redistribute income. |
Control inflation, stabilize currency, promote employment and economic growth. |
| Focus |
Broader economic factors including fiscal health and social welfare. |
Money supply, credit availability, and cost of borrowing. |
| Time Frame |
Usually medium to long term. |
Short to medium term, often adjusted frequently. |
| Impact on Public |
Directly affects taxes and government services. |
Indirectly affects borrowing costs, inflation, and investment. |
| Flexibility |
Less flexible due to political processes. |
More flexible and quicker to adjust. |
| Examples |
Stimulus packages, tax cuts, social welfare programs. |
Raising/lowering interest rates, buying/selling government securities. |
economic policy vs monetary policy