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Fiscal Policy

The way in which the elected federal government manages its money. Spending and taxing are the most common kinds of fiscal policy. When you hear talk on the news of the government’s budget, or a new tax plan, what you’re hearing is a discussion of “fiscal policy.” Don’t confuse it with monetary policy, which is executed directly by the Federal Reserve and deals with setting interest rates. “Fiscal” and “monetary” are not synonyms.

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