These two topics make impact upon the economy as a whole and macroeconomics gives attention to the economic aggregates. So, it is said that fiscal policy and interest rates are related to the macroeconomics.
For example, fiscal policy involves increase in spending and it creates demand, then demand is in the form of aggregate demand that is a macroeconomic im nature. On a similar more, a lower interest rate, increases consumption and investment spending that is applied to whole economy while stimulating the demand. Hence, interest rate also work at macroeconomic level, so it is related to macroeconomics.
Fiscal Policy: Government can control the economy in a big way by adjusting its expenditure. The...
WEEK 6: MONETARY POLICY AND FISCAL POLICY A healthy economy typically has low rates of unemployment and steady prices. Low rates of unemployment means that the economy is operating at its full potential. To ensure the economy continues to operate at potential GDP (full capacity where all savings are invested in production functions, and where all those who wish to work can find a job, and all other factors of production are fully utilized in the production function), governments use...
Which of the following is NOT consistent with tightening of monetary policy? A. A central bank sells more government securities to banks. B. The country’s foreign currency may increase in value. C. Interest rates fall. D. Bank lending is reduced. E. Open-market operations may reduce banks’ supplies of funds and liquidity in a financial system. Monetary policy is preferred to fiscal policy as a _______ policy instrument because it can be adjusted more _________ than fiscal policy. A. short-term, quickly....
Can anyone please help me about Venezuela in analysis of fiscal policy: the venezuala government agency in charge of this(.e.g Ministry of Finance/Department of Treasury), its recent tax and government spending changes, the budget situation( surplus/deficit), the importance of general government expenditure in GDP. And please draw AS AD diagram to illustrate the impacts of the adjustment in its fiscal policy. 4 countries: Venezuela, South Africa, Turkey, Spain Version 2- Fiscal Policy For the specific country that you have chosen,...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
Estimating the Effect of Fiscal Policy on Output Suppose an economist finds that government spending is negatively correlated with output growth. That is, in periods in which government spending is greater than normal that output growth is, on average, relatively low and in periods in which government spending is less than normal that output growth is, on average, relatively high. Should we take this as evidence against a Keynesian model in which an increase in government spending leads to an...
31 The annual expression of fiscal policy in the light of current economic conditions. anticipated revenue, expenditure and borrowing by the government in a year a) government budget b) discretionary fiscal policy c) stabilization policies d) government expenditure 32 Government macroeconomic policies aimed at full employment, price stability and balance a) government expenditure b) stabilization policies c) discretionary fiscal policy d) cyclical budget component 33 The main role of the Federal Reserve is to a) b) c) d) administer the...
8. Using policy to stabilize the economy 8. Using policy to stabilize the economy The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. Shifts in aggregate demand are often the result of waves of pessimism...
21. Which of the following is one reason for the existence of policy lags? a. Government experts are slow in figuring out what is going on. b. Households and firms plan their spending in advance and therefore are slow in responding to changes in interest rates. c. It is impossible to build an accurate model of the economy. d. It is difficult for the Bank of Canada to change the bank rate. 22. What does the time inconsistency of policy imply? a....
In an economy where the money supply and aggregate demand have been decreased by the Central Bank, you know that the Central Bank is using 答案选项组 a contractionary monetary policy. an expansionary monetary policy. a loose monetary policy. follow expansionary fiscal policy How does monetary policy affect the market? 答案选项组 Monetary policy has a more of an impact on consumption than investment. Monetary policy has a more of an impact on government spending than investment. Monetary policy has an indirect...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...