Fiscal and supply-side policy
Increased government spending may be used as part of a fiscal policy to increase aggregate demand, and much of this spending will be directed towards the health and education sectors. In this case, fiscal and monetary polices are working in tandem to improve growth prospects, and the supply-side effects may cancel out any ill effects on the price level from the expansion in demand.
By contrast, if a government is using contractionary fiscal policy as a means of trying to control the price level, the impact may be a leftward shift in the AS curve, and therefore prices may rise rather than fall and output might contract even further than intended.
Fiscal and monetary policy
While these are both demand-side policies, if a government runs a budget deficit, this has to be financed which will affect the money markets. Much of the budget deficit is financed by issuing 3-month treasury bills, which offer investors secure and liquid assets which are easy to trade on the money markets. This helps with stability during a credit crunch, but at other times it might be inflationary as it increased liquidity available. A looser fiscal policy can mean that the MPC favours a tighter monetary policy, taking into account the fiscal stance in deciding whether to change interest rates.