In the interaction of both policies and with the aforementioned assumptions, two basic situations would arise: coordination or conflict. In the case of coordination, both of these policies operate in the same direction. By expansionary policy – central bank reduces interest rates and government stimulates an aggregate demand and economic growth by using budget deficit. By restriction, monetary policy increases interest rate and fiscal policy reduces budget deficit or generates budget surplus. In a conflict, both of these policies operate in contradiction with one another. One of these policies pursues an expansion and the other one pursues a restriction. Two situations could arise again. In the first case, fiscal policy makes an expansion – stimulates aggregate demand through a fiscal stimulus to support the economic growth and reduce the unemployment, or, increases the employment (for example, when the economy is below its potential output or before elections). On the contrary, monetary policy makes restriction – in- creases the interest rates (for example when it faces inflationary pressures). In the sec- ond case, the situation is opposite. Fiscal policy makes restrictions – reduces deficits or produces budget surplus. On the contrary, a central bank performs an expansion – re- duces interest rates (for example to face the deflationary pressures).