Fiscal and Monetary Policy

Indirect Taxes relates to VAT and Excise duties. VAT is sales tax which is collected by the business (Tesco) and given to the government. Essentially if increased it would increase the price of Tesco’s products, this subsequently

When the Federal government has to find ways to regain any money lost they lean on the expansionary Fiscal policy and the monetary policy to regain money into the economy. Whether, a change in taxes or even government spending. Even to the three major tools of the expansionary monetary policy to focus on. In the first part of this paper, I will discuss the expansionary fiscal policy and how the Federal government was involved and the changes that needed to be made to taxes, government spending. The second part of this paper, I will discuss the monetary policy and the tools the Federal Reserve used when under this policy. The expansionary fiscal policy was out to kick start the economy, and the expansionary monetary policy was out to change interest rate, and influence money supply. When discussing these two policies you have to think about one aspect when will it ever stop? Will a policy always have to be part of the economy to help the government one way or another?

There are two powerful tools that the government and the Federal Reserve use to direct our economy in the right direction- Fiscal Policy and Monetary Policy. When these tools are used appropriately, they can fuel the economy and slow it down when it is growing too fast. Fiscal policy is concerned with government spending and collecting taxes. With the fiscal policy, you can increase government spending and decrease taxes to increase disposable income for people as well as corporations. Monetary Policy on the other hand refers to the supply of money which is controlled by factors such as interest rates and reserve requirements for banks. These methods are applicable in a market economy, but not in a communist or social economy.

Luxury tax is indirect tax and may to be increase demand for certain luxury goods. Luxury tax pays for $10,000 on boats, cars over $30,000, etc. Property tax is taxes on real estate. The tax is based on the value of your property you own. Property tax funding goes towards animal control police, emergency plans, police protection, etc. Sales tax is tax on sales or on the receipts from sales. For every dollar, you spend on sales tax cities and counties get three quarters of a cent, health and welfare programs get a half cent, local transportation and road maintenance gets one quarter of a cent,

The Federal Government uses the monetary policy and fiscal policy to establish and determine the best way to manage the economy. Monetary policy is used by the Federal Reserve to manage the money supply. This includes credit, cash, check, and money market mutual funds, with loans, bonds, and mortgages being the most important. This policy can be broken into two categories: monetary restraint and monetary expansion. As it states, one is trying to restrain the market while the other expresses expanding the market. With control over the money supply, the two categories for monetary policy can manage the inflation of the economy. After this has been complete, the unemployment rate is a second objective that is handled and reduced. Fiscal policy is used as reference to the tax and spending policies, and is handled completely by the Federal Government rather than the independent agency of the Federal Reserve. In comparison to the monetary policy, there is also two sub categories of expansion and restriction. This paper will explain why I believe the monetary restraint policy is the best option for maintaining a stable economy through the use of controlled spending by limiting the access consumers have to money, its reliability in being the solution to a growing problem, and the benefits we see from past occasions. Using the monetary restraint policy will require the Federal Reserve to increase the interest rate nation-wide requiring citizens to decrease spending and borrowing.

business. Taxation policy affects business costs. It is clear in business that a rise in a

Monetary policy, in the short run, has an impact toward the demand for goods and services. That is, monetary policy has a distinct influence over inflation and other economic factors, not only at the federal level, but at the state and citywide levels. Monetary policy will influence the financial conditions facing firms and households in the environment, even at the micro level. Thus, employees who produce goods and services are impacted, as is the demand for those goods and services. When monetary policy imposes changes, the financial conditions that affect the economic activity in specific sectors are influenced as well. The federal government, through fiscal policies

they are taxes that are levied on imports and exports. its encourages trade between countries

Ultimately, the citizens are the most benefited or prejudiced by these taxes and subsidies. As it has been said before, Australia’s rates and tariffs are significantly lower when compared to those that other countries apply; and the income that results from these said payments should be applied on new infrastructure, on attending the people’s needs, and on ensuring that unforeseen disasters will be properly faced and answered. This is the ideal system of taxing and applying tariffs: for the country’s money to serve the country’s needs. Still, applying additional taxes to industries or

Stimulating, keeping balance, and influencing our economy are only a few things our nation strives for when it comes to regulating our economy. Two of the powerful tools our government uses in getting our countries economy in the right direction are fiscal and monetary policy. Both of these policies are extremely effective in their own ways and when used together can only help an economy more than harm it. Taking a closer look at the policies individually, the fiscal policy seems to have a bigger role in regulating the economy. Through government management the fiscal policy seems to hold up its part of the deal and betters the economy in the long run.

The deficit affects a University of Phoenix student because funding for financial aid could be compromised leading to more private loans. Loans become

Nowadays, economic growth and stability is the goal that governments aim to achieve. There are two main ways to achieve this purpose: fiscal policy and monetary policy. Monetary policy is a kind of macroeconomic policy lead by the central bank. Expansionary monetary policies can help boost the economy but it will cause inflation. There are two approaches to control money supply; there are price and quantity. Price represents interest rates and quantity means amount of money quantity. After financial crisis, U.S. interest rates already reached a low point. As a result, the only effective way to boost the economy was by increasing money supply. In other words, the U.S. government would printed money and bought bonds in the open market. New funds would entered the open market to boost economy, that is called “Quantitative Easing” monetary. Concern the U.S. dollar was the most powerful currency in the world, U.S. monetary policy could affect the whole world.

A tariff is a tax placed on particular imported or exported goods and services. There several types of tariffs; specific tariffs, ad valorem tariffs, licenses, import quotas, voluntary export restraints and local content requirements. Governments use these tariffs for protecting domestic employment, new businesses against competition,

When the GATT made the distinction between the two taxes, value added taxes or VATs were rarely used. Since the VAT replaced the EU’s multi-stage sales tax system, the GATT classified the VAT as an indirect tax. This was a mistake on the GATT’s part as Hufbauer author of The Foreign Sales Corporation Drama: Reaching the Last Act? explains “GATT alchemy transforms a series of

As a type of consumption tax, as of January 1 2014, 164 countries employ a Value-added Tax in the world. All Organization for Economic Co-operation and Development (OECD) members except the United States now applied VAT. According to the research by OECD committee, consumption tax was a large source of tax revenues, and “the VAT accounted on average for 6.6% of GDP and 19.5% in total tax revenues in OECD countries in 2012,” which was the largest proportion (“Consumption tax trends 2014”). To become familiar with the performance and importance of the VAT, leaning the meaning and implementation of VAT in a specific country would be a effective way to know why VAT developed rapidly in the worldwide in contemporary society.