Final answer:
The two basic tools used by the government to influence the economy are monetary policy, managed by the central bank, and fiscal policy, determined by the legislative and executive branches.
Step-by-step explanation:
The two basic types of tools the government uses to try to affect the economy are monetary policy and fiscal policy. Monetary policy involves managing the money supply and interest rates and is typically conducted by a nation's central bank. In the United States, this is the responsibility of the Federal Reserve.
Fiscal policy, on the other hand, involves changes in government spending/purchases and taxes and is determined by the nation's legislative body and the executive branch. Both tools are used with the aim of influencing macroeconomic conditions such as the standard of living, unemployment, and inflation.