'Governements Use Fiscal Policy to Help Them Achieve Their Macroeconomic Objectives' Explain What Is Meant by This Statement and Discuss Specific Fiscal Measures That the Uk Government Has Implemented in Recent Years to

There are about 150,000 homes purchased in UK per year. The industry experiences the £1.5billion excess of revenue per year (www.wimpeyrawdeal.co.uk ). There is high price competition within the companies in the industry.

Fiscal policy is the government use of taxing and spending to meet economic goals. The tools of fiscal policy are taxing and spending, and the United States government controls it.

The government implements an economic policy mix involving macroeconomic and microeconomic policy in order to achieve their objectives. The three main objectives include:

New home sales and inventory have reached trough levels and can only go higher from there. This implies that residential construction will transition from a drag on GDP growth to a modest benefit for the foreseeable future.

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.

Primarily, you must understand that lowering the rate of interest will make it cheaper for people to borrow as well as make it cheaper to pay back existing loans. As a result, firms may use this money that they have saved to spend on upgrading the

According to recent analysis from the International Monetary Fund (IMF), in 2010, the UK is estimated to have had the fourth highest level of structural government borrowing amongst the 29 advanced economies for which comparable data are accessible. This structural government borrowing is one of the main underlying issues that the Budget, over the reign of this current government, will try to address. However, at least according to plans published so far, the UK is intending the fourth largest fiscal consolidation among this same group of countries and so by 2017 the IMF predicts that the UK will have a lower level of structural borrowing than many other advanced economies, being below the average in the Euro area and below the average among the G20 and G7 countries.

America’s 2008 recession brought on “falling home prices and tight credit; state- and local-government cuts; higher oil prices that stood in the way of economic growth (“Back from the,” 2012). The price of homes dropped significantly pushing the equilibrium price down resulting in a shortage and an increased demand for houses at lower rates. When this occurs, suppliers are motivated to start producing fewer homes until a new market equilibrium price and quantity are achieved. After America’s recovery in 2009, suppliers slowly began to produce more homes and since that time, house prices have gradually increased (“Back from the,” 2012).

Fiscal policy is often linked with Keynesianism (Michael Smith, Investpedia), which is derived from British economist John Maynard Keynes. Theories of Keynesianism have been used over time as they are popular and specifically applied to assuage economic downturns. The principle behind fiscal policy is influencing the level of aggregate demand in the economy to achieve economic factors of stabilizing the price, full employment and economic growth. Fiscal Policy is a government’s decision regarding spending and taxing. If a government wants to increase or restore growth in the economy, Spending rises. More items are purchased in spite of sticky prices, because of this the firm increases output.

Fiscal policy is the use of government revenue (taxes) and expenditure (spending) to influence the economy. (Weil, 2008) Fiscal policy is “used to stabilize the economy over the course of the business cycle.” (Fiscal policy, n.d.) Examples of both of these according to National fiscal policy response to the Great

Demand for housing, particularly in Sydney and Melbourne, greatly outnumbers the supply available. Simple supply/demand economics tells us that this undersupply of property in the face of overwhelming demand will cause inflation. From March 2014 to March 2015, Sydney saw an average property price increase of 13.1% (ABS: Residential Property Price Indexes 2015). Currently, the RBA’s reaction to this is to play it safe by keeping cash rates at 2% (RBA: Monetary Policy Decision July 2015). The RBA want growth to be sustainable and long term on the Australian economy during a difficult time, but how does this affect the housing market? This lowers the risk of defaulted loans for buyers, particularly on fixed interest rate mortgages. ASIC chariman Greg Hedcraft says that Australia is experiencing a similar housing bubble to the U.S. pre GFC. This was caused by high interest rates and borrowers defaulting loans due to unexpected heightened interest rates, crushing the U.S. (and international) economy. However the RBAs recent interest rate decisions have been heavily criticised, with economists believing that these low interest rates, high consumer incentive to ‘buy now’, and predicted growing unemployment rates – peaking at 6.5% (Federal Budget 2015) could lead to future mortgage defaults and a large debt problem. Australia’s current economic state involving one

Keynes’ theory suggests that individuals will not necessarily demand what is produced, therefore firms must produce what consumers demand rather than simply expanding production (increasing supply, which previously was assumed to increase aggregate demand). Thus, the level of economic activity, or total output (O) was determined by the total expenditure (E) within an economy. The amount spent by firms, individuals, the government and foreigners is determined by their level of income (Y), which is determined by their level of production (O). Therefore, Keynes proposed that the equilibrium level of income, where there is no tendency to change occurs when:

Seven years removed from recession, American homeowners are beginning to rebound from the hold created by the housing crisis. Throughout history, the housing market has been a key indicator of financial stability and the real economy. Housing booms and bust are often reflections on the mortgage market, labor mobility and consumer spending. With interest rates near zero, at the moment, the real estate market has experienced a steady rise in new and existing home sales, prices and mortgages. Likewise, developments in the U.S. housing market have been instrumental to gains in home improvement spending. In 2015, home improvement retailers, Lowe’s and Home Depot have delivered better than expected results thanks to the housing market recovery. Despite what may seem like a modest recovery, there remains significant concerns that the recovery will be short lived. Some evidence would suggest that interest rates, a flood of foreign investments, income inequality and the same culprits from 2008 are re-inflating a housing bubble.

The “Great Recession” is commonly used to explain the massive economic contraction that occurred in the United States during the fourth quarter of 2007. However, the actions of the United States spanned to other nations, leaving massive effect on the global economy. One nation that took on serious financial burden during this recession was the United Kingdom. This nation first faced the effects of the Great Recession beginning in the first quarter of 2008. Overall, the initial mass effects on the nation can be attributed to the nation’s reliance on the financial sector. In fact, after partially stabilizing in 2009, the country struggled with a double-dip recession between 2010-12, and continues to struggle with some of these effects.

Since the global financial crisis of 2008, the UK government has been implementing various policies to combat the recession and stimulate economic growth. This essay will look at how effective the fiscal and monetary policies used since the crisis are in achieving the four-macro economic objectives. In addition, I will provide my input on the best way the UK government can carry out these policies.