Discuss the Differences in Philosophy,key Actors,and Tools of Fiscal and Monetary

question 52

Essay

Discuss the differences in philosophy,key actors,and tools of fiscal and monetary policy.Should the federal government give preference to one to the other? Why or why not?

---

Definitions:

Substitution Effect

The change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution.

Income Effect

The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve

Aggregate Demand

Aggregate demand represents the total demand for goods and services within an economy at a given overall price level and in a given time period.

Future Generations

Individuals or populations that will exist in the future, beyond the current members of society, whose interests are considered in long-term policy making.