0
Why is monetary and fiscal policy is relevant in a market economy?
Wiki User
∙ 9y ago
The Fed controls money supply in order to control prices. With less money in the economy, prices with be lower because money will be more rare. With more money in the system, prices with be higher because there is more money to go around. The Fed controls this so society can predict what will happen to prices in the future and plans business accordingly. You don't want to wake up one day and find apples $10/lb when it was $2/lb last month.
Wiki User
∙ 13y ago
Add your answer:
Earn +20 pts
Measures to control of business cycles?
Business cycles can be controlled by appropriate fiscal policy and monetary policy. When the economy enters the recessionary phase, government spending should be increased (fiscal policy measure). This includes infrastructure projects, subsidies to productive sectors, etc. When infrastructure projects are undertaken, there is requirement of labor (when roads are built, construction labor is required), which leads to employment. Also supplies of cement, iron, steel, etc is required. The production of these commodities increase. People start earning wages. They earn, and so they consume more. As a result of which economy enters into expansion phase. Thanks to subsidies, cost of production goes down. The producers can offer products at lower cost. When the economy enters expansionary phase which is above the normal growth path, monetary measures by Central banks are effective. The central bank tries to reduce the money in circulation with its open market operations and by increasing Reserve requirements. Basically contractionary monetary or fiscal measures are used to deal with high growth and inflation, while expansionary monetary or fiscal policy for recession.
Why did Greece shift from a barter to a coin economy?
Monetary based economies are superior to barter systems due to the fact that you don't have to carry your goods with you to market.
When there is high inflation in country what are the measures taken by nation govt?
Govt measures inflation status by using economic policy instrument, fiscal and monetary policy directed toward market structure and the level of unemployment rate in the economy, because inflation and unmployment are corrolated. Finaly Govt mesure unemployment through inflation and inflation through unemployment.
Which countries have a market economy?
Almost every country has a market economy; North Korea still has a command economy. WRONG^^ U.S. is rumored to be a market economy, but there are not pure market economy.
Does Algeria have a market economy?
yes, it has a market economy.
Measures to control of business cycles?
Business cycles can be controlled by appropriate fiscal policy and monetary policy. When the economy enters the recessionary phase, government spending should be increased (fiscal policy measure). This includes infrastructure projects, subsidies to productive sectors, etc. When infrastructure projects are undertaken, there is requirement of labor (when roads are built, construction labor is required), which leads to employment. Also supplies of cement, iron, steel, etc is required. The production of these commodities increase. People start earning wages. They earn, and so they consume more. As a result of which economy enters into expansion phase. Thanks to subsidies, cost of production goes down. The producers can offer products at lower cost. When the economy enters expansionary phase which is above the normal growth path, monetary measures by Central banks are effective. The central bank tries to reduce the money in circulation with its open market operations and by increasing Reserve requirements. Basically contractionary monetary or fiscal measures are used to deal with high growth and inflation, while expansionary monetary or fiscal policy for recession.
What has the author Edda Zoli written?
Edda Zoli has written: 'How does fiscal policy affect monetary policy in emerging market countries?' 'Credit rationing in emerging economies' access to global capital markets'
Why did Greece shift from a barter to a coin economy?
Monetary based economies are superior to barter systems due to the fact that you don't have to carry your goods with you to market.
What is Bolivia economy?
Market Economy.
When there is high inflation in country what are the measures taken by nation govt?
Govt measures inflation status by using economic policy instrument, fiscal and monetary policy directed toward market structure and the level of unemployment rate in the economy, because inflation and unmployment are corrolated. Finaly Govt mesure unemployment through inflation and inflation through unemployment.
Describe the role of central banks and their efffect on the global economy?
A monetary policy making and has an influence over the financial conditions of the global market as a whole. SK(apex)
Which countries have a market economy?
Almost every country has a market economy; North Korea still has a command economy. WRONG^^ U.S. is rumored to be a market economy, but there are not pure market economy.
Does China have a market economy?
No, china does not have a market economy!
Is Bahrains economy command or market?
a market economy
What does a market economy encourages?
market economy encoursae
Is Greece market or command economy?
Market economy
Does Algeria have a market economy?
yes, it has a market economy.
