First, fiscal policy mainly uses the adjustment of tax rate to restrain or support a certain industry and achieve the purpose of macro-control. For example, in order to stimulate demand, the state has introduced a trade-in policy for home appliances and used financial subsidies to encourage consumption. Another example is that the state has introduced preferential tax policies to promote the development of waste recycling industry.

Second, monetary policy mainly uses the interest rate adjustment of financial institutions to adjust the economy. The most typical example is to cancel the preferential interest rate policy for the second home loan in order to curb the excessive rise in housing prices.

In a word, the state does not want an industry to develop too fast, so it will raise the tax rate and increase its cost (fiscal policy), or raise interest rates and increase its financing cost (monetary policy). Or vice versa, Dallas auditorium monetary policy tools:

(1) Conventional monetary policy tools or broad monetary policy tools. It refers to the means that has a comprehensive or general impact on the expansion and contraction of money and credit in the whole financial system. It is the most important monetary policy tool, including the deposit reserve system, rediscount policy and open market business. Mainly from the total amount of regulation and control of money delivery time and credit scale.

(2) Selective monetary policy tools refer to tools used in some special credit or some special economic fields. They focus on the qualitative aspects of controlling banking activities, focusing on the asset utilization and debt management activities of some individual commercial banks or the whole commercial banks. They are a necessary complement to traditional monetary policy tools. Common selective monetary policy tools mainly include: credit control in securities market, real estate credit control and consumer credit control.

(3) Supplementary monetary policy tools, in addition to the conventional and selective monetary policy tools mentioned above, sometimes some supplementary monetary policy tools are used to directly or indirectly control credit. Supplementary monetary policy tools include: ① direct credit control tools, which refer to various measures taken by the central bank to directly intervene in the credit creation business of commercial banks according to law, mainly including credit distribution, direct intervention, liquidity ratio, interest rate restriction and special loans; (2) Indirect credit control tools refer to the central bank's special position in the financial system to guide its credit activities through consultation and publicity with financial institutions, thus controlling credit. The main ways are window guidance and moral advice.

Simply put:

When the economy is overheated, we will tighten fiscal expenditure and control investment in fixed assets. Compress monetary policy and control the circulation of money market.

When the economy is in recession, expand fiscal expenditure and increase investment in fixed assets. Relax loan restrictions and increase the market money stock.

GDP= consumption+investment+government expenditure+import and export.