Congress, President and Economic Policy Monetary Policy . The Federal Reserve System controls monetary policy. Key interest rates are regulated by the Federal Reserve System. The primary task of the Federal Reserve System is to control inflation Fiscal Policy. Congress controls fiscal policy.
Fiscal policy is simply budgets, taxes, and spending.
J ohn Maynard Keynes. Keynes identified conditions under which government intervention can help the economy. In particular, budget deficits can stimulate a depressed economy. Budget deficits during a recession should, according to Keynes, be balanced with budget surplus during period of economic growth. The Employment Act of 1946 formalized federal intervention in the economy to promote economic growth.