A prudent fiscal policy means balanced fiscal revenue and fiscal spending.

A proactive fiscal policy means increasing fiscal spending to stimulate domestic consumption, to spur private investment and to expand exports.

A prudent monetary policy means adjusting the policy according to economic fluctuations. When there is any sign of economic recession, the monetary policy will be fine-tuned toward loose; when there is any sign of overheated economic development, the policy will be fine-tuned toward tight.

A moderately loose monetary policy means increasing money supply by printing money, buying bonds in open markets, cutting reserve requirement ratio for commercial banks and lowering loan rates.

A tight monetary policy means expanding the money supply more slowly than usual or even shrinking it.

(Compiled by Beijing Review)