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Fiscal Policy is done by Government (BUDGET SESSION) [Remember as Fiscal POLICY= FISCAL YEAR =BUDGET]

Monetary Policy is done by FED (FED=FEDERAL RESERVE = CENTRAL BANK)[if you are not from US, don't get confused] [Remember as Monetary Policy= MONEY ,BANK (Central)]

Government(FISCAL) can only do two things, 1. Increase/Decrease its own Spending and 2. TWEAK TAXES!!
[Fiscal Policy also tries to balance INFLATION AND UNEMPLOYMENT but the affect is minimized due to TIME LAG] its action does affect GDP, INFLATION and UNEMPLOYMENT!!



FED(Monetary) : they manage money supply to keep INFLATION and UNEMPLOYMENT under check!! THEIR motive is to INFLUENCE the FED FUND RATE (the Interest rate that ONE BANK (COMMERCIAL) charges to LOAN ANOTHER BANK(COMMERCIAL)]

1.Decrease the supply of money = decrease Inflation=Increase Unemployment=Increase Interest Rate= Decrease Investment= decrease GDP=Currency Appreciate

2. Increase the supply of money= increase inflation=decrease unemployment=decrease interest rate=increase investment=increase GDP= Currency Depreciate

Tweaking FED FUND RATE is *NOT* a STEPS/Action taken by FED, its the REACTION of the ACTION of the OTHER STEPS of FED
1. Discount Rate
2. Open Market.
3.Reserve required