Fiscal policy refers to the government's use of spending and taxation to influence the economy. By adjusting tax rates and government spending, policymakers aim to promote economic growth, reduce unemployment, and control inflation. For example, increasing spending on infrastructure can create jobs and stimulate demand. Monetary policy involves the management of a country's money supply and interest rates, typically conducted by a central bank like the Federal Reserve. By changing interest rates or buying and selling government bonds, central banks can influence economic activity, aiming to maintain price stability and support economic growth.