Monetary policies are interference in the economy by the central bank of a country with an aim of influencing economic activities. Intervention by the central banks can be through interest rates, regulation of the banks and open market operations. These actions could be aimed at reducing or increasing money supply in the economy (Gitman, 2009).
Fiscal policy is manipulation of government expenditure to achieve certain objectives. Fiscal policies include public adjustment of taxes, reducing or increasing government expenditure. Preparation of deficit or surplus budgets is fiscal policies that can be implemented to achieve certain objectives (Zoli, 2005).