Description
Title: Impact of fiscal and monetary policies on employment, income and price level.
This project is designed to help students understand management of expansionary and recessionary GDP gaps.
a.Students can use macroeconomic models in chapters 11, 12, 13 and 15.
b.When do we employ expansionary monetary and fiscal policies? Evaluate impact of the expansionary monetary and fiscal policies on income, unemployment rate and the price level. Student may examine the 2007-9 recession period.
c. When do we employ contractionary monetary and fiscal policies? Evaluate impact of the contractionary monetary and fiscal policies on income, unemployment rate and the price level. Students may refer to the 1979-1982 inflation period.
Source: Economic Indicators: U.S. Government Printing Office (government budget deficits and changes in money supply)
Explanation & Answer
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Running Head: FISCAL AND MONETARY POLICIES
FISCAL AND MONETARY POLICIES
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1
FISCAL AND MONETARY POLICIES
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Impact of Fiscal and Monetary Policies on Employment, Income and Price Level
Globally, monitory and fiscal policies are key contributions towards the economic growth
of any given country. The core foundation of these policies is the interest rates management,
national control of the supply of the money by the superior financial governmental control firms,
for example, the central bank and the diverse governmental tax operations. However, the
expansionary and contractionary policies develops a new uniqueness in the evaluation of the
fiscal and the monitory policies. Expansionary policies are objected towards the development of
the economic growth via the eradication of the inflation increase which is achieved through the
maximization of the availability of money to the consumers and also business people. The factor
that contributes to the maintenance of the increased supply of money to the consumers, is the
maximization of the financial regulating governmental firms, for example, the central bank,
therefore, discouraging the levels of inflation. On the other hand the Contractionary policies are
concerned with the minimization of the government spending in different dimensions and the
general increase of the taxes. The contractionary policies reduces the supply of money towards
the consumers and the business people, this leads to the price inflations and therefore reducing
the purchasing power of the currency.
Expansionary monitory and ...
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