Macroeconomics

1. Fiscal Policy:

Govt. tax and spend policies

2. Monetary Policy

Manipulation of the money supply by the Federal Reserve system to affect short-term interest rates and control inflation

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From a government policy perspective, macroeconomics focuses on two primary issues:

• Fiscal Policy, which deals primarily with the amount of government spending and taxation. The Federal Budget is basically the government’s taxation and spending policy.
• Monetary Policy, which is controlled by the Federal Reserve currently chaired by Alan Greenspan. The monetary policy of the Federal Reserve affects short-term interest rates directly; and inflation and long-term interest rates indirectly. The current priority of Mr. Greenspan is to keep (inflation) in check.