As we learned in the prior section the Bank of Canada has the ability to increase or decrease the number of dollars in the the economy. As we also have learnt this can impact inflation and deflation. When the Bank of Canada uses or is instructed to use this system to achieve a goal such as a rate of inflation, we call this Monetary Policy.
Meanwhile Fiscal Policy is when the government uses spending programs and/or tax incentives to stimulate the economy. Perhaps the two most common examples of this are: