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.

Fiscal and Monetary Policies in the USA - Essay Example

Monetary policy
During the period before 2000, monetary policy in USA was less discretionary, more predictable and was focused on ensuring price stability of goods and services; this meant that the FED avoided growth in money and interest rates that had previously caused periods of booms and burst. In the recent past, this trend has changed and FED lowered the interest rates to abnormally low levels, which saw a large scale uptake of mortgages in the country. With the change in monetary policies by lowering the interest rates, the rate of inflation started to rise, which forced FED to intervene; the level of intervention adopted by the authority was more tight than that which they would have adopted had they not reduced the interest rates. The tightening of the monetary policy caused panic among the investors, and moreover, the increase in interest rates also meant that the individuals who had taken up mortgage to finance their housing plans were unable to service the loans.
FED increased liquidity in the market to help the economy recover from the depression that a rise in interest rates had caused therefore stabilising the markets. FED did this by increasing the level of reserve balances and reducing the deposits that it requires commercial bank to hold. After the 2008 depression, United States of America has adopted a zero lower bound on the norminal interest rate as a discretionary intervention, in addition, the country has also embraced quantitative easing which includes large scale

Check these samples - they also fit your topic

The central dilemma of macro-economic policy is not the choice between using monetary or fiscal policy but whether to intervene
However, it does not deal with the question whether these policies are desirable. On the contrary, normative analysis looks into the question whether the policy should be used. Therefore, there are various disagreements within economists based on personal beliefs and value judgments (Abel & Bernnanke, pp.21, 2005).
6 pages (1500 words)Essay
Canadian Monetary and Fiscal Policies
Indeed, much success has always been realized in the context of Canadian economic development to the extent that one is left to wonder about the policies in place and the various measures the government has put into place to ensure the country sails through these turbulent economic times.
7 pages (1750 words)Essay
How Monetary and Fiscal Policies were Implemented during the Recession
The year 2008 witnessed the greatest depression since the great depression of the 1930s. This was because of the irrational exuberance in the housing market that led many people to buy houses that they could not afford. These investors were speculative that the future prices of houses would only rise.
4 pages (1000 words)Essay
Monetary and fiscal policy
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.
5 pages (1250 words)Essay
Monetary and fiscal policy
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 in the 2008 economic crash, general effect on the economy and loss of jobs would have turned out to be stunning.
4 pages (1000 words)Essay
Fiscal and Monetary Policy
(Farinha & Marques 2001). The government often employs fiscal policy, monetary policy or a combination of both to sway the economy back to an equilibrium position. The manner in which the government employs both policies may result to either fiscal or monetary dominance.
10 pages (2500 words)Essay
Monetary and fiscal policy
Monetary policy is the attempt to control macro economic variables in an economy (primarily inflation) through the use of interest rates. In Britain, the target of monetary policy is to keep inflation
4 pages (1000 words)Essay
Fiscal and Monetary Policy
At the times of recessions or the times when economy is at its struggling stage, active policy emphasizes on a view that the current position of the economy
2 pages (500 words)Essay
Monetary and Fiscal Policies on Recession

The author states that when a business cycle fails to follow as predictable trend, then it results into unfavorable conditions which are negative for a business to thrive in the economy. Study has shown that the period prior to a recession phase, many businesses experience a boom which leads to optimistic but instead, the economy slumps.

2 pages (500 words)Research Paper
Fiscal and Monetary Policy
According to the discussion, Fiscal and Monetary Policy, the object of monetary policy is the stabilization of macroeconomic fundamentals, such as those relating to stable prices, stable growth rates for the economy, and the levels of employment and unemployment, with the ideal being full employment.
5 pages (1250 words)Essay
buy out of mortgages and treasuries (Taylor, 338). Fiscal policy The government of the United States of America has been spending more than it earns, this has the effect of increasing the debt levels in the country. In the recent past this debt has risen tremendously leading to the country’s debt levels reaching alarming levels which needed intervention. The country’s fiscal policy has deviated from investing in public goods, which may increase competitiveness in the economy and focussed more on other sectors such as Medicare, which represent entitlement (Havard business review, 114). The tax regime in the country has also done nothing to improve the situation since the corporate tax code ensures that high levels of taxes are levied but the revenues do not increase significantly. In addition, there is mortgage interest deduction, which has worked to ensure that money that would be more productive in other areas of the economy is tied to the housing sector. In the recent past, the US government has adopted a countercyclical and expansionary fiscal policy where government spending has been on the rise during economic downturn, for instance, the 800 billion dollars stimulus package that the government enacted in 2009. However, this stimulus package was cancelled out by some states, which reduced their spending in order to balance budgets therefore neutralising the effect of the stimulus package. The government has also changed the tax regime with temporary tax cuts for some individuals below a certain income threshold set to expire on 31st December 2012 being extended permanently. This increases the amount of disposable income for people in the income bracket and hence money available for investments. Fiscal and monetary policy in the US economy


In the last few decades, the economy of the united states of America has experienced a relatively prosperous time and on the other hand, it has also encountered challenges. This paper will discuss the financial and monetary policies in United States of America and the impact on the economy. …
Fiscal and Monetary Policies in the USA
Read TextPreview
Comments (0)
Click to create a comment or rate a document
Let us find you another Essay on topic Fiscal and Monetary Policies in the USA for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us