Identify and explain in detail the monetary policy tools

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The Federal Reserve System's Board of Governors and the Federal Government both maintained contractionary monetary and fiscal policies during the last economic expansion. For the purposes of this essay, assume that recent economic data shows that the economy is still growing at a fast rate.

Question: Identify and explain in detail the three monetary policy tools that the Board of Governors could use to fix this rapid expansion and the two fiscal policy tools that the Federal Government could adopt to address the problem. Be specific in explaining what the tools are, how they will be manipulated by their respective agencies, how they work, and what they are fixing in the economy. Then describe how the actions of the Fed and Government will affect people's spending and saving habits, aggregate demand in the economy, the three economic health indicators, and the amount of money in circulation.

Reference no: EM133322714

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