Question

In: Economics

Describe a real government policy in the context of the macroeconomic principles ,the economic problem it...

Describe a real government policy in the context of the macroeconomic principles ,the economic problem it attempted to tackle and the intended goals. Who were the agents pushing it forward? Who was against it? What was the incentive framework of the main agents involved before the policy was implemented? And what was the incentive framework implied by the policy? You must be able to identify groups of people with similar background or interests and compare the economic policy from the viewpoint of these groups. You are free to choose any government policy that is interesting to you: fiscal policy, monetary policy, or regulatory policy.

Solutions

Expert Solution

During an deflationary level, govt. can adopt expansionary fiscal policy(lowering tax rates and increasing govt. spending) and central bank can have expansionary monetary policy ( lowering interest rates and increasing money supply ).

I would discuss expansionary fiscal policy. As explained above, this policy aims to drive economic recession out by increasing investments by govt. that leads to more jobs generation and more income for the people. It also reduces taxes so that disposable income with people and businesses increase they can invest more in markets. A healthy economy also aims to reduce social tensions. The agents pushing it forward will be banks, businesses, people. There will be a few economist who may fear price level rise and may oppose it by saying that market is free to correct itself effectively and efficiently.

Govt. through this policy aims at making people happier and reduce economic tensions that may create trouble and may not reelect incumbent govt. Following stakeholders are affected due to this policy:

Govt.: They have to put money in the markets and this leads to fiscal deficit and govt. credibility goes down if fiscal deficit increases.

Businesses: Tax reduction makes them better off but they may fear future taxcincrease.

Common people: They may feel better when more jobs are generated but fiscal deficit may increase indirect tax and burden may be more on poor people.


Related Solutions

Analyze a real government policy in the context of the macroeconomic concepts we learned in class....
Analyze a real government policy in the context of the macroeconomic concepts we learned in class. Describe the economic problem this policy attempted to tackle and the intended macroeconomic goals.Explain who were the agents pushing this policy forward. Who opposed the policy? What was the incentive framework of the main agents involved before the policy was implemented? And what was the incentive framework implied by the policy? You must be able to identify groups of people with similar background or...
Background: Evaluating the International Macroeconomic context of Australia's 2020 economic performance – current policy challenges and...
Background: Evaluating the International Macroeconomic context of Australia's 2020 economic performance – current policy challenges and likely future directions. Is Australia well positioned to recover in 2021? Question: Describe in 500 words with a diagram the intertemporal model of the current account- the CA balance: likely changes and implications for future consumption - metzler diagram - implications for domestic investment.
The Macroeconomic Paper tests your ability to apply economic principles to a business decision considering the impact of macroeconomic variables.
  ECON545 Paper Project 2 The Macroeconomic Paper tests your ability to apply economic principles to a business decision considering the impact of macroeconomic variables. Select one situation from the items outlined below: A to D. Complete the paper on the selected situation as specified below. The completed paper is a professional report and is due in Week 6 (180 points). See the grading rubric at the end of this document. Be sure to use the DeVry library to find...
Describe how the government uses tax and spending policy to alter the economic environment? Is each...
Describe how the government uses tax and spending policy to alter the economic environment? Is each fully at the discretion of the government, or are there boundaries on how they establish this policy each year? Economists describe Growth Policy and Stabilization Policy as two significant theories that drive policy making. What is each? What are the benefits and drawbacks of each? When is each ideally used?
This deals with the six debates over macroeconomic policy, which include stabilization policy, government spending, monetary...
This deals with the six debates over macroeconomic policy, which include stabilization policy, government spending, monetary policy on rules versus discretion, zero inflation target, balanced budget, public debt, and reforming tax laws. There are pros and cons of using monetary and fiscal policy tools to stabilize the economy. a, Explain the main arguments in favor of economic stabilization during recessions. Explain why policy lags could make stabilization policies counterproductive. b. What are the justifications given in favor of more government...
Name the 3 goals of macroeconomic policy and the ways/tools that the government uses to contribute...
Name the 3 goals of macroeconomic policy and the ways/tools that the government uses to contribute to their achievement? Include both the aggregate demand and supply model to support/explain your answer.
1. The two main tools of macroeconomic policy include monetary policy and fiscal policy. Briefly describe...
1. The two main tools of macroeconomic policy include monetary policy and fiscal policy. Briefly describe the main components of each.
What does aggregation mean in a macroeconomic context? 

What does aggregation mean in a macroeconomic context? 

What is the broader background and context for the reframing of public policy (environmental, social, economic)...
What is the broader background and context for the reframing of public policy (environmental, social, economic) using a “wellbeing” lens – i.e. what triggered/motivated this change in the “evaluative framework” for public policy?
The Macroeconomic Environment Analyze the role of government in the macro economy, including government macroeconomic policies...
The Macroeconomic Environment Analyze the role of government in the macro economy, including government macroeconomic policies and the objectives on which they are based. Objectives: - Controlling inflation Economic growth, Reducing unemployment d.   A favorable balance of payments       e.  Controlling public borrowing       f.  A stable exchange rates Policies: - Functions of government in the economies. Fiscal policies Monetary policy Direct controls *** Follow the assignment guidelines: - (Introduction, Discussion, Review, Suggestion, conclusion & reference) do not forget the guidelines
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT