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If unemployment is high and the federal government spends more and lowers taxes the government is utilizing what policy?
Wiki User
∙ 12y ago
fisical policy
Wiki User
∙ 12y ago
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When the federal reserve board lowers interest rates it most likely attempting to?
lower interest rates.
When the government lowers the income tax to stimulate the economy it is an example of what kind of policy?
monetary policy
Which situation most likely results when the government lowers interest rates to banks?
Economic activity increases.
What happens to the monetary base if the central bank lowers the discount rate?
If central bank lowers discount rate prices will go up and it will be monetarily more expensive.
Why do interest rates fall during a recession?
The Federal Reserve lowers interest rates during a recession in hopes to spark economic activity (aka consumer spending).
What happens to a net personal income with the government lowers taxes?
If the government lowers your taxes your NET income increases.
Who can make a new common law rule in australia?
Common laws can only be made by the federal government. Only if the legal legislation is passed by both upper and lowers houses and by the senate.
When the federal reserve board lowers interest rates it most likely attempting to?
lower interest rates.
What happens when federal bank lowers short term rate?
it means they run the term for only a short while
When the government lowers the income tax to stimulate the economy it is an example of what kind of policy?
monetary policy
Which situation most likely results when the government lowers interest rates to banks?
Economic activity increases.
What happens to net personal income when the government lowers taxes?
your net income increases, but your income tax decreases
What happens to net personal income when government lowers taxes?
your net income increases, but your income tax decreases
Why does government want to have low unemployment?
Unemployment affects the economy and its people through output and distributional effects; The output effects pertain to the productive capacity of the economy as a whole and include: The creation of a GDP gap, which inhibits growth by leaving the economy 'under employed'. This means that the full economic potential of the economy is not being utilised because of a labour deficiency, thus eroding the living standards and the level of economic activity (All other things being equal). Furthermore it creates a loss of production possibilities, that is, the economy is not producing to its fullest potential, which in turn, lowers the future prospects of increased economic performance. There is also an opportunity cost associated with unemployment, in that those unemployed labour resources could be more productively allocated for he benefit of the macroeconomy. Furthermore, there is a social dimension, as unemployment creates social problems, characterised by an inequality of sacrifice. These problems have occurred historically in periods of Depression, such as The Great Depression, in which unemployment reached 29% in Australia. Unemployment, all other things being equal, places greater stress on social services and welfare, and thus creates distortions in resource allocation, insofar as government expenditure on welfare increases which generally pilfers funding for government investment, etc. Distributional effects refer to the disparities and social equity issues unemployment creates, for example, long term unemployment often requires people to draw on their savings to finance living expenses, and hence, aggregate savings fall (All other things being equal). The ramifications of this are significant, in that it creates long term financial difficulties. Furthermore, the income hierarchy is not equally affected by unemployment, with historical periods showing us that demand deficient unemployment has a greater effect on lower income earners (The working classes and unskilled people). This disparity exacerbates social divisions, which, in the government's context is politically volatile and dangerous. So, now I've gone through the ramifications of unemployment, it is apparent that elevated levels of unemployment (Mainly caused by demand deficiency) have inherent and negative social consequences as well as macroeconomic repercussions all of which are undesirable. As I have gone through, unemployment also places a notable strain on government revenue (With tax receipt theoretically decreasing coupled with increasing welfare liabilities.) Therefore, there is an issue pertaining to macroeconomic management as well as political perception, and it is unsound for a government to neglect unemployment. The social problems created are likely to decrease public support for a government and more importantly, the macroeconomic credentials of the government are likely to be compromised. It is , therefore advisable for a government to maintain a rate of unemployment close to the 'natural rate of unemployment' which is defined as a circumstance in which there is no cyclical (demand deficient) unemployment, and the only recurrent unemployment figures are related to frictional unemployment or structural unemployment (both of which theoretically are economically beneficial in the long term). This natural rate was originally defined as 6%, however, the increasing mechanisation of the economy increases accessibility, lowering it to around 4.5-5%. This figure, however, is different in different countries. I hope that answers your question thoroughly enough.
What happens to the monetary base if the central bank lowers the discount rate?
If central bank lowers discount rate prices will go up and it will be monetarily more expensive.
Why do interest rates fall during a recession?
The Federal Reserve lowers interest rates during a recession in hopes to spark economic activity (aka consumer spending).
The effect of alcohol in the body?
lowers the temperature lowers the temperature
