(2) The significance of policy effect. The significance of effects of fiscal policy depends on the multiplier effect, but fiscal policy has crowding-out effect, and the effect of fiscal policy is also related to the slope of LM curve. On the other hand, monetary policy IS also related to the slope of the IS curve.
(3) Their mechanisms of action are also different. Fiscal policy directly affects the total demand and has the characteristics of quick effect. However, monetary policy acts on interest rates and indirectly on total output, so there is a time lag in monetary policy.
(4) The implementation channels and motives of the two policies are also different.
These two policies often need to be used together, with a proactive fiscal policy in the expansion period and a tight monetary policy in the contraction period.
(5) Different meanings: fiscal policy refers to the government's influence on aggregate demand through the adjustment of fiscal revenue and total expenditure; Monetary policy is that the central bank regulates the money supply and the amount of credit, which in turn affects the economy.
(6) Different contents: the contents of fiscal policy and fiscal revenue are related to expenditure; The content of monetary policy is related to interest rate and credit policy.
Fiscal policy: fiscal policy refers to the guiding principle of the state's fiscal work according to the tasks of political, economic and social development in a certain period, and regulates the total demand through fiscal expenditure and tax policies.
Monetary policy: the central bank uses various tools to adjust the money supply and interest rate to achieve the established economic goals (stabilizing prices, promoting economic growth, achieving full employment and balance of payments), and then affecting macroeconomic policies and measures.
In addition, there is a certain relationship between them, 1. Both fiscal policy and monetary policy are national macro-control economic policies. They mainly implement expansionary or contractive policies, adjust the relationship between total social supply and total demand, maintain the balance of economic aggregate, promote the optimization of economic structure, and realize the sustained, rapid and healthy development of the national economy. 2. The ultimate goal of fiscal policy and monetary policy is the same. Both require stable currency value, stable economic growth, full employment of workers and balance of international payments to promote the development of socialist market economy. 3. In general, fiscal policy and monetary policy are synergistic. The characteristic of fiscal policy is that the policy operation is strong, which can quickly start investment and stimulate economic growth, but it is easy to cause inflation.