Macroeconomic Policies Used By Government And The Central Bank

1972 Words8 Pages
AMIR TUKUR

ECONOMICS FOR GLOBAL BUSINESS

This section of the report we will be discussing and evaluating Macroeconomic policies used by the Government and the Central Bank in China over the last two years. Articles, graphs and journals will be used in an attempt to explain/demonstrate what macroeconomics is, policies in macroeconomics and how Government and Central Banks apply them with a particular focus on the Chinese economy.

Macroeconomics is a branch of economics, which deals with the performance, structure, and decision-making of an economy. It focuses on economy-wide phenomena such as unemployment, national income, rate of growth, inflation and relevant environmental factors. In an attempt to understand these ever changing…show more content…
The fiscal tools are used to stabilize the economy from changes in taxation, to government spending in other sectors of the economy to promote growth. One might even say the government uses these instruments in order to distribute wealth amongst an economy.

Effects of Monetary and Fiscal policy on the economies GDP The graph above shows in a simple form the effects of these instruments on an economy. The graph assists in showing how the government of an economy and the central bank work hand-in-hand in order to affect the growth of an economy. By buying debts from the central bank and increasing the loaning out of money, the supply curve can experience a positive shift. The graph on the right, illustrates how the government uses its fiscal tools to affect aggregate demand. With the collection of taxes and the increase in expenditure the aggregate demand curve shits to the right therefore bringing about a rise in the aggregate demand. All in all these policies are techniques used for the growth of an economy. Focusing on a lot of data decisions are made using this technique for bringing about positive progress.

The country selected to be discussed and elaborated on is China. This is the world’s most populous country; it stands top with a staggering population of 1.35 billion. China is a single-party state governed by a Communist Party. When dealing in Economies it is important to know
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