Fiscal Policy Generally fiscal policy is the set of strategies that government implements or plans to use with certain activities such as the collection of revenues and taxes and expenditure that can influence the overall economic condition of the nation. A well written or planned fiscal policy can lead the nation to the steady path of the strong economy, increase employment and also maintains healthy inflation. Every country needs fiscal policy as fiscal policy plays a vital role on monitoring
particular is likely to occur when growth is above the long run trend rate and the aggregated demand increases faster than aggregated supply. China and India are two countries where this combination of strong economic growth and rising inflation has been seen in recent years. In 2010, China grew by 9.8% but her inflation rate was 4.9% and rising. India grew by 8.6% but her inflation rate was 8.3%. Persistently higher rates of inflation can then have negative effects on international trade performance
and rapid declines in the policy rate (the very short rate) in late 2008 and early 2009. Considering the US, the UK, and Japan, did long rates fall as much around that time or less or more? In late 2008, many developed economies where in or close to recession, with growth slowing noticeably in the emerging economies. These events prompted an easing of monetary policy and expansionary fiscal measures in many countries (Reserve Bank of Australia, 2008). The policy rate is the target 'cash rate'
the peak levels a couple of years ago. If oil prices stay at these levels, which of the BRICs (Brazil, Russia, India, China) do you think would benefit the most? Why? ℑ The countries that will benefit the most are China and India. China is the second largest importer of oil with a large population. It’s ability to consume more oil will be greater with a drop of oil prices. Also India will benefit from lower oil prices. With oil accounting for about a third of India’s imports, in combination with
The post-GFC expansionary monetary policy of Australia Background The global financial crisis (GFC) is begun with the collapse of Lehman Brothers in Sep. 2008, when a loss of confidence in stock investors of the value of sub-prime mortgages caused a liquidity crisis, resulting the global central banks injecting a large amount of capital into the financial markets and consumers ' confidence hit the bottom, according to McKibbin, W.J. (2009, p.1). The second phase of GFC stepped after the US bank crisis
don’t match with the credit availability as a result the relationship gets hampered”. (Turner, 2008) It is a situation which happens during recession. It is important to find out the reasons. Some of the reasons for it are • Decrease in bank capital: After a recession situation banks are not able to match the demand. The demand for loans rises. During the recession period banks incur loss. As a result they are not able to lend in the same way. So, when the demand
have these policies been? per capita income is national income/population.So the 1st and foremost reason is over population. The national income of India is progressing at a slow rate.This is because of 1.Defect in planning 2.Non development of industrial sector. 3.Lack of technological progress. The per capita income of India is lower than the percapita income of some developed countries.To find out the reason we may have to go back to the early fifties.After Independence, India adopted socialistic
The 2008 credit crunch was driven by a severe delinquency on sub-prime mortgages, which started mainly in the summer of 2007 in America and subsequently had a spill over affect as it spread globally due to shortages of funds in the banks, hitting markets all over the world. This started with a ‘housing boom’, whereby there was plenty of incentives for people to ask for mortgages off banks due to the low interest rates they had to pay. At an early stage the banks saw great repayments and a great way
A GDP comparison of India and China China and India are the two giant’s economies of Asia, which are now regarded as the “success stories” for their massive economic development for the past two decades. On their way to economic growth they have more dissimilarities than similarities. The most common things among them are their ancient civilizations, population, covering substantial geographical areas and developing economies of the world. They both apparently benefited from globalization as well
Every bank has to have a certain amount of reserves with them from the total deposits that have come in the bank. The central bank decides on the percentage of those reserves that the banks hold from the individuals’ deposits. During Expansionary Monetary Policy: a. Change the reserves requirements: The reserve requirement is lowered by the Central Bank as the Central Bank wants to increase the money supply in the economy. b. Open Market Operations: The Central bank buys the financial assets