2008 FRQ #3

Post date: Apr 17, 2013 3:54:15 PM

3. Fiscal policy and monetary policy are two tools used by the federal government to influence the United States

economy. The executive and legislative branches share the responsibility of setting fiscal policy. The Federal

Reserve Board has the primary role of setting monetary policy. (2008)

(a) Define fiscal policy.

(b) Describe one significant way the executive branch influences fiscal policy.

(c) Describe one significant way the legislative branch influences fiscal policy.

(d) Define monetary policy.

(e) Explain two reasons why the Federal Reserve Board is given independence in establishing monetary policy.