Fiscal and monetary policy

Fiscal and Monetary Policy
Name
Institutional Affiliation
Governments employ a number of measures to ensure they can control the state of the economy. The use of monetary policies by the United States Government is meant to ensure continued economic growth. The current plan focuses on short-term interest rates. The government seeks to bolster the economy by helping promote increased borrowing (“The Fed – Monetary Policy,” 2018). This has also helped different sectors of the economy to get the needed funding to help them increase the employment opportunities. The government also uses the monetary policies to help them deal with the state of inflation in the long run.
The United States government also employs some fiscal policies. The policies are meant to ensure the government can deal with particular instances in the economy such as government spending. The Trump administration has proposed many measures including tax cuts. This will ensure the citizens are relieved from the additional burdens, and they can focus on economic development (Mayeda, 2018). The government has also set out measures to ensure they can improve on government spending. The current administration has boosted public spending by $300 billion which is expected to improve economic performance.
The economy faces many challenges regarding using monetary and fiscal policies. The reduction in the short-term interest rate ensures more people can access credit facilities. This is likely to result in a situation where different individuals cannot repay the loans which are likely to stoke inflation.

The increase in public spending and the introduction of tax cuts will boost the debt levels in the country. The government might not be in a position to control the debt levels and might result in a rise in the inflation levels.
References
Mayeda, A. (2018). U.S. Fiscal Stimulus Raising Risks to Global Economy: IMF. Retrieved from https://www.bloomberg.com/news/articles/2018-06-14/u-s-fiscal-stimulus-raising-risks-to-global-economy-imf-warnsThe Fed – Monetary Policy. (2018). Retrieved from https://www.federalreserve.gov/monetarypolicy.htm