Question

How does GDP, monetary and fiscal policies impact the macro economy?

Please Answer in 150 words

Answer 1

Macroeconomic variables such as interest rates, inflation and exchange rates play a vital role in the economic performance of any country. The main objective of this paper was to investigate the effect that changes in the inflation and interest rates have on the Gross Domestic Product.It represents the value of all goods and services produced over a specific time period within a country's borders.Economists can use GDP to determine whether an economy is growing or experiencing a recession.Investors can use GDP to make investments decisions—a bad economy means lower earnings and lower stock prices.Monetary policy impacts the money supply in an economy, which influences interest rates and the inflation rate. It also impacts business expansion, net exports, employment, the cost of debt, and the relative cost of consumption versus saving—all of which directly or indirectly impact aggregate demand.macroeconomic effects of fiscal policy using a Bayesian Structural Vector Autoregression (B-SVAR) approach. We identify fiscal policy shocks via a partial identification scheme, but also: (i) include the feedback from government debt; (ii) look at the impact on the composition of output; (iii) assess the effects on asset markets; (iv) use quarterly data; and (v) analyse empirical evidence from the US, the UK, Germany and Italy.