Analyze the monetary and fiscal policy of the U.S. and China (including analysis of the interest rates), and how that can impact a firm's (e.g. CAT) economic activity.

The monetary policy concentrates more on regulating and controlling the money supply through interest rates, while the fiscal policy concentrates more on aggregate demand of products and services through increasing the amount of money in circulation by reducing or cutting taxes and raising government spending levels.

The China monetary policy aims mostly at maintaining the value of the RMB and increasing economic growth. Some of the China monetary policy's significant policies include the exchange rate, bank loans, and the interest rate policies. The exchange rate policy aims to maintain the exchange rates at a specific level to influence exportation and importation in the country. The interest rate policy maintains money supply at particular levels that retain the economy at a healthy level. The central bank loans ensure that there is a steady flow of money in financial institutions.

China's fiscal policy concentrates on increasing government spending through the increment of the budget deficits. A deficit is when expenses are higher than revenue. The reason for the China fiscal policy goal is to increase investments, maintain steady economic growth and development, and increase government spending.

The U.S monetary policies focuses on several economic factors, including money supply, maintaining steady and stable prices, and regulate long-term loan interest rates. The Federal Reserve is in charge of controlling the U.S monetary policy by regulating interest rates issued on loans and controlling loans issued to the banks. The higher the interest rates, the higher the borrowing cost, and the lesser the money in circulation.

U.S fiscal policy is similar to China's fiscal policy because they aim to increase spending in the economy through the increment of deficits. They also aim to increase and maintain a stable economic growth rate with more spending in their local markets.

Since both countries' fiscal and monetary policies aim at increasing money supply and economic growth rate, the impact on firms in both countries will be similar. The higher the money supplies, the more the spending in the markets, and thus firms' products are sold out faster. This indicates an increase in profits and production for firms.