The constant changes in market economies make it almost impossible to maintain a constant level of economic activity. Fluctuations are at the heart of market economies; without them market economies cannot exist. These fluctuations can be described as the business cycle, and like any cycle, there are a series of events that build these phases. The business cycle consists of three phases, expansion (until the peak point is reached), a declining point into recession, and a rebound from recession into recovery. These events need to be examined carefully because it is possible for the economy to make extreme highs and lows that can abruptly change the flow of the cycle. For example, if neglected and the economy hits an extreme low, considered a recession, it would be extremely difficult for the economy to recover from this recession and would face severe consequences such as huge debts. Consequences like these are the exact reasons why we have a nation's governing body (government), whose job is to monitor the economy to produce sustainability and growth. In situations like these, the government implements and enforces certain policies that apply to specific situations and circumstances. Such policies guide the government to influence and control the direction of business through borrowing, spending, and taxes. Such policies are called economic policies and are also implemented to control the total demand for final goods and services in the economy at a certain time and price level (aggregate demand). There are two policies that specifically control aggregate demand and stimulate the economy, fiscal policy and monetary policy. Fiscal policy is about taxation, “fiscal policy is changes in taxation es…… middle of paper…. ..the goods market is influenced by fiscal policy and the asset market is linked to monetary policy. The question of which policy is most effective continues to remain unanswered because different views will lead to different opinions about how effective the policy is and what level of effectiveness it produces. Keynesians, who adopt fiscal policy, and monetarists both disagree due to different assumptions. In the end, what remains are the facts: “monetary policy has become more popular because fiscal policy can have greater supply-side effects on the overall economy, monetarists argue that expansionary fiscal policy is likely to cause crowding out, and monetary policy is quicker to implement.” of fiscal policy” (Difference between monetary policy and fiscal policy, economicshelp.org). In general, both fiscal and monetary policy help stimulate the economy.