Monetary Policy And fiscal policy Can be categorized into two main types of policy to shrink. It is to pull money out of the economy as the government's tax collection. Rather than used to finance Also known as Budget surplus Or the central bank to pull money out of the economy. It's used during the inflation. Another policy is expansionary. It is extra money into the economy as the government spends more than it taxes. Also known as Budget deficit And the central bank Put money into the economy in different ways. Often used when deflation.