Final Paper Sometimes the economy needs a push in the right direction to get to a better level of equilibrium. This can be done through fiscal and monetary policies, implemented by our government. According to the Federal Reserve, “Fiscal policy is a broad term used to refer to the tax and spending policies of the federal government” (Federalreserve.gov n.d.). Decisions regarding fiscal policy are determined by Congress and the presidential administration. “Monetary policy is a term used to refer to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth” (Federalreserve.gov. n.d.). Fiscal policy uses changes in government expenditures or taxes to influence inflation, economic activity and growth. Keynesian economists, who agree with the opinions of ____ Keynes, argue that government influence is the only way to reach economic stability. Their belief is that the government is the only ones who must act in the best interest of society. To do this, they must use their taxing and spending powers to offset changes in private demand. This belief is backed by the fact that households will save more during hard times and recessions because they cannot be sure of their employment and income situations in the future. Similar reasons can be given for why businesses invest less in these times. For these reasons, households and businesses are unreliable for solely pushing the economy out of a recession; a stronger force is needed, which is the federal government. As with most goals, a target must be set for fiscal policy to be used wisely. “Policy makers must identify a target level of national income” (Amacher et al., 2012. Section 9.2). Depending on how close or far this target is from the equilibrium level, the government must adjust taxes and or spending to try to