Question

Identify 3 actions that you would take to improve the macro-economy. Use at least 1 fiscal policy action and 1 monetary policy action. Explain the actions, the problem, and how the action will cure the problem. Use concepts from the text in your answer.

200 word Min

Answer 1

Economic growth is usually driven by consumer spending and business investment. Tax relief and rebates are used to compensate consumers and increase costs. Deregulation has loosened some of the company's rules, which are known to create growth, but may increase risk. Basic spending aims to increase productivity by creating jobs in the construction industry and make companies operate more efficiently.

Therefore, monetary and fiscal policies are aimed at improving the macro economy.

Fiscal and monetary policies can enable the government to gain support and stimulate the economy. Monetary policy is concerned with the supply of money from the interest rates and issuance point of view, and is usually managed by the central bank. Tax policies refer to taxes and public expenditure, and are generally determined by law. Monetary and monetary policies have a huge impact on a country's economy, its business and consumers.

Central banks typically use monetary policy to stimulate the economy or stunt growth. The purpose of monetary policy is to encourage economic activity by encouraging individuals and businesses to borrow and consume. Conversely, to limit spending and encourage savings, monetary policy can serve as a turning point for inflation and other issues related to the overheating of the economy.

Various policy instruments that affect the economy: market operations, modifying the bank's statutory reserves, and setting discount rates. When the Fed sells US government bonds to invest in the economy or withdraw money from circulation, the open market is operated every day. By establishing a reserve ratio or maintaining the percentage of deposits required by the bank, the Fed directly affects the money lent by the bank. The Fed can also handle changes in the repayment rate (interest rate borrowing from financial institutions), which will affect the short-term interest rate of the entire economy.

Expansionary monetary policy, high house prices and low debt may have a limited impact on the rise in interest rates, which will benefit the company more.

Tax cuts and tax rebates are designed to allow more consumers to pay for themselves. Ideally, these consumers spend some of this money on various businesses, thereby increasing the company's revenue, cash flow and profits. Having more capital means that the company has the resources to raise funds, improve technology and become stronger. All these activities increase productivity, which stimulates the economy. Advocates claim that tax cuts and tax exemptions can enable consumers to use more money to stimulate the economy.

As with any stimulus used to stimulate economic growth, it is often difficult to determine the amount of growth generated by stimulus and other factors and market forces.