What is the difference between fiscal policy and monetary policy?

Fiscal policy refers to the use of government spending and taxation to influence the economy. It is managed by the government and aims to stabilize the economy by adjusting spending levels and tax rates. For example, during an economic downturn, the government may increase spending or reduce taxes to stimulate demand. Monetary policy, on the other hand, involves the control of money supply and interest rates by a country’s central bank (such as the Federal Reserve in the U.S.). The central bank may lower interest rates to stimulate borrowing and spending or raise them to control inflation. While fiscal policy is focused on government budgets, monetary policy is focused on money supply and credit availability.