Prepare a typed written paper addressing “The Fiscal Policy and the Monetary Pol
ID: 2465141 • Letter: P
Question
Prepare a typed written paper addressing “The Fiscal Policy and the Monetary Policy”. The paper should be at least two pages in length. Your paper should address information such as, the definition of each policy. What each policy accomplishes. What is the need for each policy in reference to what each policy aims to accomplish? How does each policy affect banks? Who is responsible for each policy? Who makes the governing decisions for each policy? Etc. You may include information that I have not listed.plese help THIS IS IN PRINCIPLE OF BANKING
Explanation / Answer
Answer
Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. Central government is responsible for Fiscal policy and makes governing decisions of fiscal policy.
Monetary policy is Economic strategy chosen by a government in deciding expansion or contraction in the country's money-supply , Applied usually through the central bank. A monetary policy employs three major tools: (1) buying or selling national debt, (2) changing credit restrictions, and (3) changing the interest rates by changing reserve requirements. Monetary policy plays the dominant role in control of the aggregate-demand and, by extension, of inflation in an economy. Central bank of Country is responsible for monetary policy. Central bank makes governing decisions regarding monetary policy.
Objectives of Fiscal Policy
The objectives of the fiscal policy are as follows:
Objectives of monetary policy
The objectives of monetary policy are as follows
Effects of Fiscal and monetary policy on Banking system
Fiscal policy influences taxes, Public savings, private savings, inflation rates, Balance of payments, & capital formation & monetary policy affects money supply, Exchange rates, Interest rates, Reserve requirements which will affect deposit growth, Credit growth, Deposit rates, Lending rates & exchange rates relating to baking system and ultimately will affect profitability , liquidity and Solvency of banking system.