Nobody downloaded yet

The Main Monetary and Fiscal Policy Instruments Available to the British Government - Essay Example

Comments (0) Cite this document
Summary
The British economy likewise any country’s economy is governed by microeconomic and macroeconomic policies of the government. These are the monetary and fiscal policy instruments at macro-level, the essential components of the UK government economic policies. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.1% of users find it useful
The Main Monetary and Fiscal Policy Instruments Available to the British Government
Read TextPreview

Extract of sample "The Main Monetary and Fiscal Policy Instruments Available to the British Government"

Download file to see previous pages rend of contracting and competitive tendering so that services improve through competition between the private and public sector in such areas as NHS catering, laundry and cleaning services along with infrastructure development and correction services. The government has initiated such schemes as value for money for its departments by setting performance parameters in increased numbers (Riley, “Fiscal Policy,” par. 7). Demand and Supply-side Policy Demand and supply side policies are government tools that help it to achieve policy aims. The demand side policies of the UK government are: 1. Fiscal policy—it is related to levying of taxes and government outlays. 2. Monetary policy—it governs issues like rate of interest and flow of money. 3. Exchange rate policy—it involves shuffling in the rate of Sterling Pound. Supply-side Policies 1. Help the government in boosting competition and performance in product markets. 2. Help in increasing of competition and production in factor markets, particularly labour markets. 3. Help in boosting the domestic savings by offering incentives. 4. Offer attractive schemes to firms for increased production and investment (Economics Online, “Fiscal Policy,” par. 6). Fiscal Policy It is the planned attempts to change the government outlay or taxation to gain desired macroeconomic results by manipulation in aggregate demand. There are two classes of fiscal policies, discretionary and automatic. 1. Discretionary policy. It is related to such policies that are formulated and enforced by one-off policy changes. 2. Automatic policy helps in stabilizing the economy by fiscal drag and fiscal boost (Economics Online par. 1). Fiscal Drag It diminishes the effect of increased income for goods as taxes are levied in increased ratios....
An active fiscal policy increases the chances of deficit budgeting which is central to Keynesianism; it is still a trend of the British government to boost the morale of the money markets by not indulging in grand scale fiscal surpluses. Under the New Labour government, the fiscal policy plays a passive role in changing the budget deficit position over a business cycle but it should not mean that the New Labour government has terminated the active fiscal policy in principle; it has been ‘coarse-tuning’ the fiscal policy to get positive vibes. The New Labour does not deny a desired rate of unemployment, delinking any correlation between inflation and unemployment, which shows that in macroeconomic policy no setting in aggregate and effective demand is possible. The concept of interplay between supply and demand sides and their relation with unemployment can be clearly seen in the New Labour government. The need for interaction between both microeconomic and macroeconomic policies is needed for growth, stability and employment. Supply-side issues are important but demand jerks are risky. The New Labour government is nearer to Keynesian in identifying that demand alone cannot ensure stability in employment, a crucial feature of New Labour’s political economy. One thing is clear that policies of the New Labour government have not promoted competitiveness. It is significant to note that the New Labour government has not faced a test of its macroeconomic policies in recession time although Britain’s macroeconomic policies have reduced the tremors felt by France and Germany in 2002-03.
...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Main Monetary and Fiscal Policy Instruments Available to the Essay”, n.d.)
Retrieved from https://studentshare.org/law/1419110-the-main-monetary-and-fiscal-policy-instruments-available-to-the-british-government
(The Main Monetary and Fiscal Policy Instruments Available to the Essay)
https://studentshare.org/law/1419110-the-main-monetary-and-fiscal-policy-instruments-available-to-the-british-government.
“The Main Monetary and Fiscal Policy Instruments Available to the Essay”, n.d. https://studentshare.org/law/1419110-the-main-monetary-and-fiscal-policy-instruments-available-to-the-british-government.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The Main Monetary and Fiscal Policy Instruments Available to the British Government

Monetary and Fiscal Policy: Government Reactions During a Massive Recession

...?Monetary and Fiscal Policy: Government Reactions during a Massive Recession In the present time, the word recession is being widely used by almost every body to describe the ongoing global economic scenario, which has been experiencing a huge down turn since 2008. All the media across the world is talking about recession every day. Whether it is a news paper, on a news channel on television, or some news bulletin on radio, everywhere people are talking about recession, the methods to recover from the recessionary situation and so on. At present, most of the economies throughout the world are going through a critical phase of recession and among all the economies. The situation has been so critical that the most power economies... employment...
5 Pages(1250 words)Term Paper

Monetary and fiscal policy

...? Monetary and Fiscal Policy a. What Fiscal Policy Tools could be used to stimulate the Economy? If the real Gross Domestic Product (GDP) is lowerthan the potential GDP, then certain fiscal policy associated tools could be used for stimulating the economy. The tools have been described hereunder. Reduction in Taxes-The governments can opt for reducing the amount of taxes that are imposed on various products. This would not only help in capturing the entire business market, but will also enable effective demand stimulation at large. Increase in Government Spending-This...
5 Pages(1250 words)Essay

Monetary and fiscal policy

...?Monetary and Fiscal Policy Monetary and Fiscal Policy If the government imposes tax cuts for 95% of all households, my firm will definitely benefit because governments should bailout companies depending on certain circumstances. Although bailing out by imposing tax cuts for 95% of all households seems as going against the capitalistic concepts that compose economy philosophy of our nation, periods such as the great depression have been there as well as the 2008 economic crash where the direct intervention of the government in the economy comes in handy. My firm is an example of successful bailout in case of tax cuts for 95% of all households including services rendered (Shiller, 2008). If my firm had folded like it was the case... ...
4 Pages(1000 words)Essay

Fiscal and Monetary Policy

...and a shift in the LM curve from LM to LM'. This is represented in figure 2b above. Conclusion From the foregoing, one can conclude that the Bank of England's main policy instrument is the interest rate. It rarely employs policies such as open-market operations and direct control over the money held by the non-financial sector. It therefore has limited instruments in targeting inflation. This is also an indication of monetary dominance whereby any fiscal policy must accommodate any monetary policy, which in this case is an influence on the interest...
10 Pages(2500 words)Essay

Monetary and fiscal policy

...U.K Fiscal and Monetary Policy and how it affects IS/LM model Each government has a way of trying to make its country’s economy the most stable one in the world. To achieve this, there has to be a balance in the market forces and equilibrium has to be achieved. In this process, the government formulates various policies like the monetary policy and fiscal policy that would influence the economy of the country. Monetary policy is the attempt to control macro economic variables in an economy (primarily inflation) through the use of...
4 Pages(1000 words)Essay

Fiscal and Monetary Policy

...28th March, Active Fiscal and Monetary Policy Fiscal policy is a government’s tool to exercise control over its expenditures and the revenues whereas monetary policy deals with the strategies made by the central bank in the form of open market operations and the change in the interest rates. There are mainly two kinds of policies which are used by the government and the central bank jointly which are referred to as active and passive policy. Active Policy At the times of recessions or the times when economy is at its struggling stage,...
2 Pages(500 words)Essay

Fiscal policy and government debt

...Fiscal Policy and Government Debt Fiscal policy is a part of economic policy of the government related to government income andexpenditure. It entails public expenditure policy, taxation policy, public debt policy and debt financing. The main aim of fiscal policy is to achieve particular objectives mainly rapid economic development (AUERBACH, 1997), bridging income inequalities and encouraging capital formation amongst other economic related goals. Interest on fiscal...
9 Pages(2250 words)Coursework

Government Fiscal Policy

...Between 2007 and 2009 the United s economy entered into its worse recession since the great depression. The citizens of America were screaming out for help from the government. Barack Obama was in a tough position, but he acted upon the request of its citizens by approving the infamous stimulus package. The stimulus package was a fiscal policy strategy that was used to jumpstart the economy. This package included bank bailouts, tax rebate checks, and other stopgap measures to stop the slowdown in the economy. The cost of this controversial package was $787 billion. One of the segments of the economy that benefited the most was the banking industry. The banks in the United States had been...
1 Pages(250 words)Essay

Fiscal and Monetary Policy

...the country’s economic problems (Parker, 2014). On the other hand, there are criticisms of the way the government has addressed the problems plaguing the Japanese economy, and chief among these concerns is that the fiscal policy move to raise consumption taxes to raise prices has resulted in a massive slowdown in the economy, even though the opposite monetary policy tool of making more money available to the system through the massive injection of liquidity by the central bank was supposed to counter the effects of higher consumption taxes. The hope was that the raising of consumption taxes would spur inflation which had been too low,...
5 Pages(1250 words)Essay

Monetary policy&fiscal policy

...Monetary Policy and Fiscal Policy Summary of the Monetary Policy Article Federal Reserve recognized that the rate of economic growth was not so fast and the central bank decided to continue purchasing bonds at the rate of $85 billion per month as offered in Fed’s program, as a way of stimulating the economy. Jim Zarroli from NPR in his explanation of whether the program has anything to contribute towards the direction of the economy declined to it having much contribution stating that the view of Fed in the economy is concerned about what has been for some time. He views this as being middling. He notes in relation to this, the high...
2 Pages(500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic The Main Monetary and Fiscal Policy Instruments Available to the British Government for FREE!

Contact Us