Economic Policies: What is the Fiscal Policy? Essay

Monetary Policy is the procedure by which the financial expert of a nation, similar to the national bank or cash board, controls the supply of money. Regularly focusing on a inflation rate or interest rate to guarantee value solidness and general trust in

Since the Central Bank has the exclusive right to issue money in the economy, it can have extensive influence on the determination of interest rate in financial markets and in the economy as a whole, by adjusting the interest rate on short-term loans to financial institutions. Central Bank interest rates on these loans therefore have the most immediate impact on other short-term interest rates in the money market. By influencing interest rates, monetary policy then has an effect on the savings and expenditure decisions of individuals and corporate.

Fiscal Policy can be explained in many ways, for example. Fiscal policy is the use of the government budget to affect an economy. When the government decides on the taxes that it collects, the transfer payments it gives out, or the goods and services that it purchases, it is engaging in fiscal policy. The primary economic impact of any change in the government budget is felt by particular groups—a tax cut for families with children, for example, raises the disposable income of such families. Discussions of fiscal policy, however, usually focus on the effect of changes in the government budget on the overall economy—on such macroeconomic variables as GNP and unemployment and inflation.

"Monetary policy is a policy of influencing the economy through changes in the banking system's reserves that influence the money supply and credit availability in the economy" (Colander, 2004, p. 659). Monetary policy also refers to the actions undertaken by a central bank,

The monetary policy is the way in which the monetary authority of the country, such as, the reserve bank, controls the supply of money. In simple terms the Reserve Bank of Australia manipulates the amount of money the consumer has left over after satisfying his/her needs.

The structural and labor policies which can increase the labor markets' efficiency and flexibility. Central banks cannot create the jobs, make sustainable growth and increase the GDP, so government should apply other policies to solve the problem.

M2: Analyse the effects of fiscal and monetary policies for a selected business in terms of the market in which it operates

     With America in recovery from the attacks on our freedom and our economy, many wonder if we will return to phase one (expansion) and how long it will take to reach phase two (recession) again. The Keynesian Theorists of America believe that the government should actively pursue Monetary policies (enacted by the Federal Reserve Bank) and Fiscal policies (enacted by Congress) to reach adjustments to price, employment, and growth levels. In our full market economy, we must use these economic policies to control aggregate demand. When these policies are used to stimulate the economy during a recession, it is said that the government is pursuing expansionary economic policies.

Monetary policy, ‘The government’s policy relating to the money supply, bank interest rates, and borrowing’ (Collin: 130), is another tool available to the government to control inflation. Figure 4 shows, that by increasing the interest rate (r), from r1 to r2, the supply of money (ms) is reduced from Q1

Monetary policy is the mechanism of a country’s monetary authority (usually the central bank) taking up measures to regulate the supply of money and the rates of interest. It involves controlling money in the economy to promote economic

Usually this goal is "macroeconomic stability" - low unemployment, low inflation, economic growth, and a balance of external payments. Monetary policy is usually administered by a Government appointed "Central Bank", the Bank of Canada and the Federal Reserve Bank

Stol (2009: 14) defines policy making as a national government being able to convert its political objectives into programmes and actions to deliver the required outcomes (Stol 2009: 14). It could be noted that for the government to effectively respond to developmental challenges it should be able to have access of the background and complexity of the challenges. Such a process would assist the

| Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe that policy can manage aggregate demand, and thereby, production and employment, to offset the inherent instability. When aggregate demand is inadequate to ensure full employment, policymakers should boost government spending, cut taxes, and expand money supply. However, when aggregate demand is excessive, risking higher inflation, policymakers should cut government spending, raise taxes, and reduce the money supply. Such policy actions put

Discuss the role of government policy in reducing unemployment and inflation. In your discussion make use of the diagrammatic representation of the macroeconomy developed in lectures in Term 2

During the 2009 budget cycle, the legislature not only reduced some important expenditure items as proposed by the executive, the National Assembly also took liberty to increase allocation for several items and introduce several new items into the budget. The National Assembly, as stated by the Chairman of the Committee on Appropriation, however made effort to comply with overriding macro-economic projections of the executive and endeavoured to stay within the general principle of the budget. In my own opinion, the legislature pushed the frontiers of citizens, pro-poor budgeting a step further, by inserting development projects to be cited in each federal constituency