Government Involvement Of Fiscal And Monetary Policies

The fiscal instrument is the budget, an annual statement from the government dealing with its income and expenditure plan for the next financial year. Fiscal Policy is an effective tool which can target specific sectors of the economy such as individual industries, unlike monetary policy which affects the economy as a whole; this is why the government implements a policy mix.

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?

Fiscal policy involves the use of government altering the levels of spending, taxation and borrowing to influence the pattern of economic activity and affect the level of growth of aggregate demand, output and employment. The main goal of fiscal policy is to stimulate economic growth, keep inflation low (target of 2%) and to stabilise economic growth. There are two types of fiscal policy. Expansionary is linked to increases in government spending to boost economic activity and contractionary which is linked to decreasing government spending to lower economic activity.

Monetary policy is the regulation of the money supply to influence variables such as inflation, employment, and economic growth. Fiscal policies, on the other hand, use the ability to tax and spend in order to influence those same variables (McEachern, 2014, p. 57). A blend of both of these policies is essential for improving the economy when a recession has occurred.

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.

The fiscal policies refer to the way in which the government affects those activities in the economy of a country. The major common fiscal policies that occur in the economy are the government expenditure and the level of taxation and they are usually advocated by the Central Bank of the country. The fiscal policies are a strategy that relates to the monetary policies that are used by the central bank of a country to control level of money supply in the country. The fiscal policies have a lot of influence on the money supply in the economy.

A form of expansionary policy is fiscal policy, which portrays itself in tax cuts, transfer payments, rebates, and increased government spending. Macroeconomists were more against fiscal policy than monetary expansion. Keynesian economists gave fiscal policy a pivotal role in combating recessions. Monetarists contested saying the fiscal policy would be ineffective if the money supply remained constant, as a result, this view point became rare. Now macroeconomists subscribe to the idea that fiscal policy, and monetary policy can aggregate demand curve. They also concur that government should not try to proportion the budget no matter what state the economy is in. They agree that the budget acts as a balancing option to keep the economy stable.

The government, by the way of its taxing, ability to spend, and controlling money supply attempts to promote full employment, price stability, and economic growth. The government strives to gain these objectives by taxing and spending which is called the fiscal policy. There are tools of the fiscal policy and they are sorted into two broad categories. The first one is called automatic stabilizers which are revenue and spending programs in the federal budget that automatically adjust with the ups and downs of the economy to stabilize disposable income and consumption and real GDP. The second one is the discretionary fiscal policy which requires the deliberate manipulation of the government purchases, transfer payments, and taxes to promote macroeconomic goals, some of these discretionary policies are temporary.

Fiscal policy is a means by which our government regulates its level of spending and tax rates to observe and impact a country’s economy. It is a budget strategy through which a central bank influences the nation’s money source. The positive and negative consequences of fiscal policy include shortage, surplus, and debt. All have fluctuating effects on how individuals view the economy, make subjective decisions, and react to unsettling changes. Individuals should consider focusing on making independent decisions that provide short and long-term profits in uncertain periods. The decisions made by individuals have lasting effects on the economy when spending increases and reinvestments in the economy are established.

Fiscal policy is the use of changes in government expenditures and taxes to alter national economic variables.

Macroeconomic policies are used to maintain and smooth out the fluctuation of the business cycle to keep the growth rate constant. There are two types of macroeconomic policy, Fiscal and Monitary. Fiscal Policy is a macro policy that allows the Government to increase or decrease the amount of economic growth by either increasing or reducing the level of taxation and Government spending. The annual budget is an example of fiscal policy. Fiscal policy takes a long time to implement as it can only be changed every 12 months but goes into effect immediately.

The most effective policy is the fiscal policy. Before I explain why the fiscal policy is more effective, I need to explain the differences between the two policies. First, I will be explaining the monetary policy. According to the website “The Economic Times,” it clearly explains that the monetary policy is made up of actions of a central bank, regulatory committee, and a currency board. They are involved in determining the size and the interest rate of money supply. The policy maintained actions such as buying or selling government bonds and change the amount of money banks are required to keep in the bank. The federal reserves are in charge of the monetary policy. There are two types of monetary policy, which are called contractionary and

In this paper, I will tell you about the United States' Federal Government and how they enact their countries Fiscal Policy. I will also speak of the times where the economy can not help themselves what the government must do. Even though I will also tell you whether or not I think the fiscal policy is well executed and who Ben Bernanke and John Maynard Keynes is, while further elaborate about discretionary fiscal policy, and speak of the times when the government must step in to improve the economy when the economy can not help itself. In my opinion, our country as a whole is improving with its economic growth, price stability, and full employment.

Governments can use both fiscal and monetary policies to move the economy from a recessionary or expansionary gap. Fiscal policies include increased or decreased government spending, increased or decreased taxation; on the other hand monetary policies include increased or decreased money supply, changes in interest rate, etc.

Fiscal policy is the governments spending policies, which influences the conditions economy as a whole. With this policy, regulators can improve unemployment rates; stabilize business cycles, control inflation, and interest rates to control the economy. The government adjusts the spending and tax rates to influence the nation’s economy. The idea is to find the balance between public spending and changing tax rates, by increasing or lowering taxes may cause the risk of causing inflation to rise. If the economy had slowed down, unemployment will go up, so consumer spending will go down and businesses are not making enough profit. If the government decides to raise the economy by decreasing tax, it will give the consumers more money to spend while it is increasing the form of buying services from building roads or schools.