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Expansionary Monetary Policy

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When it comes to Federal Reserve, they have a lot of policies to keep track of. There are two main policies that the Federal Reserve have to watch for and they are the Expansionary Fiscal policy and the Expansionary Monetary policy. Now with these two policies, the Federal Reserve Banking does have a lot to think about. They have to think about what is best for the people, the business, etc. They also have to understand what parts do these policies have and how can they be used to help instead of hurt. So people can get the wrong idea when it comes to these policies and the Federal Reserve. Now with the Federal Reserve Banking there are some things that people need to understand. The first can be just what the Federal Reserve is because …show more content…

So first there is aggregate demand, which just like the word said, it’s demanding. Aggregate Demand “is the relationship between the aggregate price level and the quantity of output.” When it comes to aggregate demand, or AD, it “can either increase or decrease depending on several things, like exchange rates, distribution of income, expectations, foreign income, and monetary and fiscal policies.” When it comes to the expansionary fiscal policy, “it causes AD to increase” (Aggregate Demand, 2006). When it comes to the Fed, I think that the Fed has to make sure that aggregate demand has to help people and business without bringing both the people and the business …show more content…

Now the monetary policy and the expansionary fiscal policy are different but the same goal is that it has to end up helping people. The monetary policy “refers to what the Fed, does to influence the amount of money and credit in the United States economy.” Some of the main goals of the monetary policy “are to promote maximum employment, stable prices and moderate long term interest rates” (Federal Resave Education). Just like the expansionary fiscal policy, the monetary policy does have its own tools to help the

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