0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
How do you distinguish fiscal policy from monetary policy?
Opinions about if fiscal policy or monetary policy is better will vary depending on who you ask. One country may benefit greatly with fiscal policy, while another may not. It all has to do with their economic system.
Raising the discount rate involves which type of economic policy?
Monetary Policy
Decreasing the reserve requirement involves which type of economic policy?
Monetary Policy
Which type of policy would the federal reserve use if the economy were entering a recession?
loose monetary policy
What type of lag is least likely a problem for monetary policy?
The administrative lag.
How do you distinguish fiscal policy from monetary policy?
Opinions about if fiscal policy or monetary policy is better will vary depending on who you ask. One country may benefit greatly with fiscal policy, while another may not. It all has to do with their economic system.
Decreasing the reserve requirement involves which type of economic policy?
Monetary Policy
Raising the discount rate involves which type of economic policy?
Monetary Policy
Which type of policy would the federal reserve use if the economy were entering a recession?
loose monetary policy
What type of lag is least likely a problem for monetary policy?
The administrative lag.
Last month I became a beneficiary to an estate in Malaysia what type of Inheritance tax do I pay?
fiscal policy
Which type of policy would the federal reserve use if the economy were entering a contractionary phase of the business cycle?
Loose monetary policy
What does fisical policies deal with?
In economics, fiscal policy is the use of government spending and revenue collection to influence the economy. Fiscal policy can be contrasted with the other main type of economic policy,monetary policy , which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy: * Aggregate demand and the level of economic activity; * The pattern of resource allocation; * The distribution of income. Fiscal policy refers to the overall effect of the budget outcome on economic activity. The three possible stances of fiscal policy are neutral, expansionary and contractionary: * A neutral stance of fiscal policy implies a balanced budget where G = T (Government spending = Tax revenue). Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity. * An expansionary stance of fiscal policy involves a net increase in government spending (G > T) through rises in government spending or a fall in taxation revenue or a combination of the two. This will lead to a larger budget deficit or a smaller budget surplus than the government previously had, or a deficit if the government previously had a balanced budget. Expansionary fiscal policy is usually associated with a budget deficit. * A contractionary fiscal policy (G < T) occurs when net government spending is reduced either through higher taxation revenue or reduced government spending or a combination of the two. This would lead to a lower budget deficit or a larger surplus than the government previously had, or a surplus if the government previously had a balanced budget. Contractionary fiscal policy is usually associated with a surplus. Fiscal policy was invented by John Maynard Keynes in the 1930s.
Match each type of policy with the example that best fits its definition. A. Protectionist policy The government goes into debt to buy a large number of vehicles for the military. B. Fiscal policy The?
Pro-
Limitations of reserve bank of India?
1. There exist a Non-Monetized SectorIn many developing countries, there is an existence of non-monetized economy in large extent. People live in rural areas where many of the transactions are of the barter type and not monetary type. Similarly, due to non-monetized sector the progress of commercial banks is not up to the mark. This creates a major bottleneck in the implementation of the monetary policy.2. Excess Non-Banking Financial Institutions (NBFI)As the economy launch itself into a higher orbit of economic growth and development, the financial sector comes up with great speed. As a result many Non-Banking Financial Institutions (NBFIs) come up. These NBFIs also provide credit in the economy. However, the NBFIs do not come under the purview of a monetary policy and thus nullify the effect of a monetary policy.3. Existence of Unorganized Financial MarketsThe financial markets help in implementing the monetary policy. In many developing countries the financial markets especially the money markets are of an unorganized nature and in backward conditions. In many places people like money lenders, traders, and businessman actively take part in money lending. But unfortunately they do not come under the purview of a monetary policy and creates hurdle in the success of a monetary policy.4. Higher Liquidity Hinders Monetary PolicyIn rapidly growing economy the deposit base of many commercial banks is expanded. This creates excess liquidity in the system. Under this circumstances even if the monetary policy increases the CRR or SLR, it dose not deter commercial banks from credit creation. So the existence of excess liquidity due to high deposit base is a hindrance in the way of successful monetary policy.5. Money Not Appearing in an EconomyLarge percentage of money never come in the mainstream economy. Rich people, traders, businessmen and other people prefer to spend rather than to deposit money in the bank. This shadow money is used for buying precious metals like gold, silver, ornaments, land and in speculation. This type of lavish spending give rise to inflationary trend in mainstream economy and the monetary policy fails to control it.6. Time Lag Affects Success of Monetary PolicyThe success of the monetary policy depends on timely implementation of it. However, in many cases unnecessary delay is found in implementation of the monetary policy. Or many times timely directives are not issued by the central bank, then the impact of the monetary policy is wiped out.6. Monetary & Fiscal Policy Lacks CoordinationIn order to attain a maximum of the above objectives it is unnecessary that both the fiscal and monetary policies should go hand in hand. As both these policies are prepared and implemented by two different authorities, there is a possibility of non-coordination between these two policies. This can harm the interest of the overall economic policy.These are major obstacles in implementation of monetary policy. If these factors are controlled or kept within limit, then the monetary policy can give expected results. Thus though the monetary policy suffers from these limitations, still it has an immense significance in influencing the process of economic growth and development.
What type of government spending is often the result of fiscal policy?
All government spending is ultimately the result of fiscal policy. Fiscal policy is another way of saying "how government spends money it raises through taxation to influence the economy". A government that believes it should not play a large part in driving economic demand through spending (a 'tight' fiscal policy) would typically raise and spend less than a government pursuing a 'loose' fiscal policy. If you count basic state expenditure on social security and healthcare as being non-negotiable then you might typically see a government engaged in discretionary spending such as large infrastructure projects as a result of fiscal policy (i.e. to directly employ the unemployed as workers and boost the economy). These kinds of discretionary spending most often result from fiscal policy. You may also want to explore the related links.
The use of taxing and spending powers to shape the economy?
The use of taxing and spending powers to shape the economy is commonly called fiscal policy. This type of policy influences macroeconomic conditions.
