Question

Economics: I have Walmart Neighborhood Market as my company. Would love some insights, and ideas for the following.

1.Describe the characteristics of the current monetary policy and fiscal policy in the United States.

2. Predict how possible changes in monetary and/or fiscal policy may impact the supply and demand of the product or service produced by the company you selected for your microeconomic/macroeconomic analysis papers as well as the financial performance of your chosen company.

Answer 1

1..

• Monetary Policy: it is conducted through the Federal Reserve in USA. Current economic variables in USA are encouraging leading to the fall in the unemployment rate. Growth rate is moving above the 2 % level which suggests tight monetary policy. Hence, Federal Reserve has raised federal fund rate to rein in prospective inflation rate.
• Fiscal policy: After Trump taking over position of president, attention has been shifted from monetary policy to fiscal policy. Trump has emphasized on reducing corporate taxes and fostering favorable business environment. Expenditure on defense is likely to fall in near future.

2..

• Products: Walmart:
• Impact of monetary policy: Monetary policy may not cast favorable impact on demand and supply for consumer products. Monetary policy may reduce the cheap availability of credit due to increased federal fund rate.
• Fiscal policy: Fiscal policy is bidding up aggregate demand owing to high growth rate and reduced taxes . Further, government is reducing expenditure on defense which would cause rise in the aggregate demand for domestic goods and services. Thus, fiscal would help to increase demand for products being offered by the Walmart.