StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Expansionary Economic Policy - Essay Example

Comments (0) Cite this document
Summary
Instructor Date Expansionary economic policy America used to embrace the philosophy of Laissez Faire in the past and this made the United States government to perform minimal roles in monitoring and controlling the economy. However, as time went by, the philosophy underwent a radical change and took a new course that was different from the parent one…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94% of users find it useful
Expansionary Economic Policy
Read TextPreview

Extract of sample "Expansionary Economic Policy"

Download file to see previous pages Fiscal policy stands for the power possessed by the federal government to tax as well as spend with an intension of achieving the goals of the economy. On the other hand, monetary policy deals with the important programs that make an attempt of increasing or decreasing the nation’s level of business activities through the legal regulation of money supply and credit. Despite the difference between the two, they both have a common goal of either decreasing or increasing the level of the business activities. A better understanding of the above two terms and what they stand for can be handled in the following subheadings. The Theory of Monetary and Fiscal Policy The theory of monetary and fiscal policy reveal that monetary policy stands for the whole process through which the central bank, government, and even the monetary authority are able to take control over three major aspects. The three major aspects include the money supply, interest rates that are meant to achieve the set objectives of stabilizing the economy, and availability of money in the economy. The monetary theory reflects on how one can be able to design the optimum monetary policy without interfering with the lives of other people. The theory goes further to give a suggestion that the monetary policy tends to rest on the relationship that exists between the price at which money can be borrowed, interest rates in an economy, and the total amount of supply of money (Persson 45-46). In addition, the money and fiscal policy make use of several tools in controlling the country’s economic growth, the exchange rates, as well as inflation. It must be noted that the exchange rates can only happen when there is another currency from a foreign country. However, if the currency tends to be under a monopoly of issuance, then there exist high chances that the regulation system might issue the currency through the existing banks, which might end up being tied to a central bank that can easily be controlled by the authority in altering the money supply and influencing the interest rates. The theory gives an overview of the roles played by the policymakers in regulating the inflation in an economy. Policymakers play a big role in making time-to-time credible announcements that are aimed at informing the citizens on the changes in the interest rates and the amount of money available for borrowing. The theory reflects on the two ways in which the decision made by the policymakers can affect the inflation. In the first case, if firms and other consumers are made to believe that policymakers are working towards lowering the inflation, then there is a likelihood of a true anticipation of lower prices in the near future compared to the current ones. On the other hand, if employees tend to expect high prices in the near future, then there are high chances for employees to draw contracts that entail high wages. This is because employees aim at covering up the high prices in the economy through earning a relatively higher income. However, in an ideal economy, there is always a likelihood of introduction of a wage-setting behavior that is meant to solve such cases that have been mentioned above. The wage setting behavior attempts to balance the relationship between the employee and employer. In case the employees are receiving lower wages that cannot meet the demands of the high prices, then the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Expansionary Economic Policy Essay Example | Topics and Well Written Essays - 2250 words”, n.d.)
Expansionary Economic Policy Essay Example | Topics and Well Written Essays - 2250 words. Retrieved from https://studentshare.org/macro-microeconomics/1492346-expansionary-economic-policy
(Expansionary Economic Policy Essay Example | Topics and Well Written Essays - 2250 Words)
Expansionary Economic Policy Essay Example | Topics and Well Written Essays - 2250 Words. https://studentshare.org/macro-microeconomics/1492346-expansionary-economic-policy.
“Expansionary Economic Policy Essay Example | Topics and Well Written Essays - 2250 Words”, n.d. https://studentshare.org/macro-microeconomics/1492346-expansionary-economic-policy.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Expansionary Economic Policy

Government economic policy

...?Governments all over have targeted goals they want to achieve. These goals, which are referred to as objectives, are not a constant but can change from time to time in keeping with economic circumstances. These objectives are crucial to the welfare of the overall economy, and how they are managed will determine not only the economic prosperity of the nation but also welfare of its citizens. The activities carried out by a government to guide the economy towards achieving these objectives are broadly referred to as its economic policies. The policies of governments can be referred to as macroeconomic policy while the policies of smaller entities like business organizations are called micro economic policies. Both these sets of economic...
8 Pages(2000 words)Essay

Expansionary Economic Policy

...? Expansionary Economic Policy Introduction As Congress takes into consideration policies aimed at fostering economic growth, there are erupting arguments that the traditional prospects of fiscal policy, namely that reducing spending contracts the economy in the short run and the need to revise the strategy. The proponents of this view also dispute that cutting costs in comparison to raising taxes would play out as a more effective method of heightening the economic development and in the least reduce misinterpreted contractions. The above arguments in most instances refer to the recent empirical studies of deficit decrease across nations around the world. They also contrast with the opinions held by many economists that exist within...
5 Pages(1250 words)Research Paper

Economic Policy Recommendarion

...? Running head: economic policy recommendation 28th November Introduction One of the notable social issues that are affecting the economic development of any country is poverty. In their efforts to mitigate the economic obstacles such as unemployment and low demand of products and poor quality of education, developing countries are faced with high level of poverty. Poverty, a state that is defined as lack of certain amount of vital materials or money, is categorized into absolute and relative poverty. Absolute poverty entails the lack of basic human needs that includes clothing, health care, shelter, sanitation, food and education. Relative poverty on the other hand, refers to the economic inequality that is experienced in a particular...
7 Pages(1750 words)Research Paper

Government Economic Policy

...Objectives of Government Economic Policy and the Instruments It Uses To Carry Them Out: Introduction: Economic policies are measures taken by the government to influence the behaviour of an economy, there exist two types of policies that government use to influence the economy and they include the fiscal policy and the monetary policies. Fiscal policies include taxation and government spending; the monetary policy will include money supply and other measures that influence the amount of money circulating in an economy. These two policies may sometimes prove to be harmful to an economy in that many scholars argue that an economy should be left at a state of laissez faire. This is to say that a government should not interfere...
12 Pages(3000 words)Essay

Effects of an Expansionary Macroeconomic Policy

... Effects of an Expansionary Macroeconomic Policy For the purpose of this assignment, the following hypothetical scenario exists: A new government has been elected under the assumption that its expansionary macroeconomic policy will lower the rate of unemployment from the current natural rate of 7% to the reduced rate of 5%. This being the case, what will be the economic effects, both in the short- and long-run, according to the AS-AD model In order to understand the AS-AD model, we must first understand the inherent relationship between aggregate supply and aggregate demand. In its simplest terms, this relationship works on the principle that price is determined by the ratio of supply to demand: a high demand and low supply...
3 Pages(750 words)Essay

The Current Economic Policy

However in Gaza, due to political problems, 95% of the factories in Gaza had closed down leading to 32000 job losses. Many of these factories were approaching a point of ‘no return’ where owners were likely to sell their assets and shut down completely. (The Portland trust, Nov 2007)

In the previous years, between 2005 and 2006, the GDP in Palestine fell by 8.8%. In the first quarter of 2007, the GDP fell by 4.2%. This was 13.2% lower than the GDP for the first quarter of 2006. (The Portland Trust, July 2007)

Besides the negative growth of the economy, it is the composition of the GDP that remains a cause for concern. The GDP is driven by Government and private consumption from aid rather than invest...

7 Pages(1750 words)Term Paper

Economic Policy of Egypt

...ECONOMIC POLICY OF EGYPT The strategies and measures adopted by a government to manage the economy as a means of achieving its economic objectives. At the macro level the economic policy of a country includes fiscal policy, monetary policy, process and incomes policy and the exchange rate policy(Pass 148). Governments adopt various combinations of these policies to achieve their objectives. Since, resources are finite; the governments establish priorities for growth. When the economic policy of a country is analyzed we can understand the plans and priorities. Hence, in this case the economic policy of Egypt is taken up for study. Egypt is one of the most populous countries in the Arab world and the country has been undergoing many...
4 Pages(1000 words)Essay

Chapter 9 Economic policy

... Economic policy This chapter offers an in-depth analysis of American political system including political policies, institutions, and resources. It reveals how America’s democracy is ineffective since it has been unable to handle inequalities in economic and political resources. Further, it shows the connections between social issues such as health care, education, and American politics. The book shades light on the ongoing debate between democracy and capitalism (Katznelson, Kesselman, and Draper 2010). The main theme in the chapter includes Health care issues America’s globalized future Education The issue of access to health care in American society is connected with the politics of power. For instance, social and economic sectors...
2 Pages(500 words)Book Report/Review

Expansionary Economic Policy

...EXPANSIONARY ECONOMIC POLICY TO MOVE THE ECONOMY OUT OF RECESSION In order to take the economy out of a depression, the federal government would connect in expansionary economic strategies. The government would undertake expansionary fiscal and monetary policies as stabilisation policies of the government. The expansionary fiscal policy is brought about by the changes in government expenditure and taxes. These changes would affect the aggregate demand , gross domestic product and employment. In expansionary monetary policy, the Federal Reserve Bank (The Fed) changes the required reserve ratio, the discount rate or carries out open market operations. These tools moves the economy out...
8 Pages(2000 words)Research Paper

United States Foreign Policy from 1945-1991

American Presidents presiding over some key events in history, such as the Cuban Missile Crisis, The Cold War, The Vietnam War, etc., were hindered from acting as public representatives due to pressure from the military-industrial complex. John Kennedy, Lyndon Johnson, Ronald Reagan, George Herbert Walker Bush, and George W. Bush – all of them were subject to these opposing interests. But eventually, the corporate-government nexus proved too powerful; and in this sense, American Presidents after the Second World War were largely restricted and powerless to uphold their higher personal values. Most of the strategic moves on part of the United States after the end of the Great War were directly in response to an anticipated th...
11 Pages(2750 words)Essay

The Economic Impact of the Emergence of China and India

The main macroeconomic variable that toys in the global economy’s shift are the emergence of India and China as new superpowers. This emergence certainly has a number of implications, but among the most relevant are: disruption of the equilibrium of the global economy which results in rising demand of goods, giving way to worldwide inflation; the attractiveness of outsourcing to these countries due to low cost but high talent workforce of these countries for cheaper operations.
The growing middle class of China and India results in booming demand for the automobile industry. This increase in demand, with the increasing purchasing power of these countries’ people, is not limited to automobiles but more apparent in...
10 Pages(2500 words)Assignment

Gross Domestic Product and the Nations Competency in Terms of Economic Welfare

It is often used to compare the economic performance to aid as a prediction tool and to analyze the business cycles and the recessive and expansive economic performances within them. This further aid economic and fiscal policy formulation of the government and is also used to analyze the consumer behavior and the economic phenomena involved. (Heakal, R. 2008).These figures can be a benchmark to compare economies of different nations and the economic prediction process is also made possible.

A usual pattern of assessing the Gross Domestic Product is to have an initial GDP report on every quarter which is an advance report. Two corrective reports follow this before the final figures on GDP are arrived at. It usually takes...
7 Pages(1750 words)Report

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages(2500 words)Research Paper

Information Security Policy of Organization

In the modern age of information technology, there are many threats created for organizational information. Organizations need a security model that has the capability to handle and secure our information reserves. Technical administrative safety /security measures like security plans, actions and procedures are the general practices for the organizational information security procedures. The attentiveness of producing actions is concerned by the organizations to an appreciably smaller level, on the other hand at the same time these are weighed up as being further efficient organizational actions than technical administrative ones. Information security encompasses organizational features, officially authorized aspects, institution...
6 Pages(1500 words)Research Paper

Economic Analysis of India

The country’s economy is fast growing with a stable political system that encourages foreign investment although with certain restrictions. The country generally has good energy, transport and communication systems which make the cost of doing business affordably.

The Republic of India found South of Asia is by far the world’s most populous democracy and ranks seventh largest in terms of geographical area (Brown, 1994). India is also the second most highly populated country in the world. The country has a rich culture with four major religions having originally emerged from it; Sikhism, Buddhism, Hinduism, and Jainism. The Indian Republic consists of seven union territories and 28 states and ranks twelfth la...
8 Pages(2000 words)Case Study

Bernard Madoff : A Scapegoat of the Economic Crisis

Darwin was condemned and treated with contempt by the Church for proposing the theory of evolution that linked all living matter in the earth, including humans. In the case of Bertrand Russell, he was imprisoned as a conscientious objector, for expressing his opposition to British participation in the First World War. These are typical examples of people being wrongfully punished when they were guilty of no crime or fraud or misdoing. It would be highly improper to associate Bernard Madoff with the aforementioned luminaries, for he was truly guilty of carrying out the biggest financial fraud in modern history. At the same time, it would be simplistic to classify him as a victim of the contemporary judicial system. The truth, in fa...
6 Pages(1500 words)Assignment

European Union Policy: Turkey

...Running Head: European Union.... Topic: European union policy Order#: 377392 Topic: European union policy Profile of Turkey-history, geography and population: “Area: Approx 780,000 sq km (300,000 sq miles) Population: 71.9m (July 2008 est) Capital city: Ankara People: Majority Turks. Minorities recognised under the Turkish Constitution: Jews, Armenians and Greeks. Other ethnic peoples include Kurds, Circassians and Bosnians. Language: Turkish (official), Kurdish Religion: Muslim Currency: Turkish Lira (TL) Government: Parliamentary republic. Membership of international...
9 Pages(2250 words)Case Study

International Business: World Economic Forum and Davos 2010

...Introduction Globalization, one of the most hotly debated issues means global capitalism to some while others consider it to be the continuation of modernism with the forces of wealth, progress, democracy and happiness at play (Kellner, 2002). Globalization is considered to be beneficial which promotes economic prosperity, cultural diversity and technological advancement. According to the critical social theory, technology and capital work together to create a new globalized and interconnected world. While each force of globalization is important, technological revolution has impacted the business models, value creation and differentiation (Spelman, 2010). The cloud computing technologies that have made the popular social networking...
7 Pages(1750 words)Coursework

Globalization and World Economic Forum at Davos 2010

...Globalization and World Economic Forum at Davos Forces Driving Globalization Globalization has resulted in enhanced interdependencies among thenations of unprecedented scale. This augmented interdependence has caused the dismantling of trade barriers and liberalization of markets. The forces of globalization have impacted the nations, the firms and the individuals alike with the prerequisite of liberalization of trade (Awuah, 2009). The seven forces of globalization are; Markets, Production, Culture, Labor, Technology, Environment and Liberalization. Of these factors, the globalization of markets has engaged substantial attention of the firms and the academia. Some markets are highly globalized, while some are not. The scale of market...
7 Pages(1750 words)Coursework
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 Expansionary Economic Policy for FREE!

Contact Us