There are two different ways macroeconomic policy of a country pursue its goals : monetary policy and fiscal policy.
They are two toolsets consisting of different theories regarding achieving higher economic growth and controlling the inflation.
Monetary policy is usually carried out by the central bank and its institutions and involves the setting of the base rate of the county, which is regulated by the National Bank (also the Bank of England in UK and Federal Reserve in the US). It also aims to influencing the supply of money, which is also issued by the national bank. The objectives of monetary policy is to ensure price stability, full employment and stable economic growth.
The monetary policies can be affected quickly, because decisions are typically made by a small group of people, who decide what actions the central bank will take. Consequently those policies can be implemented almost immediately.
Fiscal policy, on the other hand, is carried out through regulating public income and spending. Thus, the government may increase demand by cutting tax rates and so increase spending, which may lead to a higher budget deficit, or may reduce demand and, consequently, reduce inflation by increasing tax rates and cut public spending. THis usually results in a smaller budget deficit.
As oppopsed to monetary policy measures, fiscal policies are decided by the legislature, which are subject to a voting process and the implementation of the ensuing legislative act by the executive branch.
