Monetary policy and fiscal policy refers to the most widely recognized tools used to influence a

nation's economy
Monetary policy, Monetary policies are formed and managed by the central banks of a country
and such a policy is concerned with the management of money supply and interest rates in an
economy.
Fiscal policy is related to the way a government is managing the aspects of spending and
taxation.
The following are the differences between the monetary policy and fiscal policy;
i. Monetary policy addresses interest rates and the supply of money in circulation, and it is
generally managed by the central bank.
While,
Fiscal policy addresses taxation and government spending, and it is generally
determined by government legislative or ministry of finance of a given country.
ii. Monetary policy seeks to spark economic activity.
While,
Fiscal policy seeks to address either total spending , the total composition of spending or
both.
iii. Monetary policy it is a financial tools that is used by the central banks in regulating the
flow of money and the interest rates in an economy.
While,
Fiscal policy it is a financial tool that is used by the central government in managing tax
revenues and policies related to the expenditure for the benefit of the economy.
iv. Monetary policy has an impact on the borrowing in the economy.
While,
Fiscal policy has an impact on the budget dificit.
v. In monetary policy the exchange rates improve when there is higher interest rates.
While,
In fiscal policy there is no impact on the exchange rates.

The following are the similarities of monetary policy and fiscal policy;
i. They both represent a nation’s policies to regulate its economy. They both can be
expansionary to increase the aggregate demand during recession or restrictive to
decrease the aggregate demand when the economy is overheated.
ii. They are used for the same purpose of keeping economy growth at a steady pace,
ensuring a low unemployment rate, and maintaining the value of a nation’s currency.