Discuss The Principal Instruments Used To Achieve The Object Of Macroeconomic Policy?

918 words - 4 pages

The Macroeconomic policy is made up of two main instruments, which are the Fiscal policy and the monetary policy.The instruments of policy that are used are there to regulate the economy. They are designed in such a way so that they are able to give the government a level of control of the behaviour of the economy. When markets have failed this will give the government reason to intervene. Once the government have decided to intervene, there is still the problem of selecting the correct method of intervention. This is a question of which policy will be the right instrument to fix the problem in the economy.The fiscal policy is focused on the control of tax and government expenditure. The rates of tax will change according to surplus budget or deficit. A government will have some surplus budget left over when they have spent less money then they have received through taxation and other sources of government income. "Elementary circular flow analysis suggests that by raising the level of aggregate demand can be raised (by a multiplied amount) with favourable consequences for economy activity and employment". (Griffiths 2000). In theory, cash is injected into the economy. The demand for goods and services will rise. This will have a positive on the business community.There are two methods of financing: taxation and borrowing. The debt burden assumed by the government is itself an important policy variable and one that has implications for the conduct of monetary policy. Governments may want to smooth out the nation's income in order to minimise the negative effects of the business cycle or they may want to take steps designed to increase the national income.A reduction in the government spending will have the opposite effect on the economy, which means depressing business, lack of investment that will lead to unemployment.Fiscal changes in the economy are sometimes made to achieve specific goal. These goals will normally have either a direct or indirect benefit to business. The reduction on taxes on company profits will encourage organisations to do more investment spending. The firms that are producing industrial products will have large increases in income due to the reduction of the company profits.There are a large number of problems that government are faced with when trying to achieve goals with fiscal policy. In order to boost the economy in spending or cutting taxes, the government risk causing inflationary pressure and inflow of imports, which is not good for entrepreneurs or the financial markets.Monetary policyMonetary policy is the use of interest rates and the level of the money supply to manage the economy. Interest rates always used to be set by the government (the Chancellor), but the incoming Labour government in 1997 passed control over interest rates to the Bank of England. The 'operational independence' of...

Find Another Essay On Discuss the principal instruments used to achieve the object of Macroeconomic Policy?

Discuss the primary purpose of financial markets in respect to financial instruments and institutions

554 words - 2 pages institution is used to facilitate the flow of funds from the lender to the borrower.A financial institution such as a bank or credit union will have a large number of small-fund savers at any one time and a small number of large-fund borrowers. Provided that borrowing and saving is spread out over time, there is no problem in providing the surplus units' funds to the deficit units.Since the primary purpose of financial markets is facilitating the

Principal of the Year Essay

1099 words - 5 pages tightly aligned with our standards of teaching. Most teachers did not have positive experiences with data, pedagogy, or lesson planning. We gave them support without telling them what to do. This concept frustrated a staff that was used to taking orders from the top. However, the staff did come around and started to make the changes necessary for student success by learning how to collect, analyze and develop a plan of action without being told

The King of Instruments

1355 words - 5 pages Music is extraordinarily influential and has transformed a significant amount from where it began. Music is used for entertainment, expression of feelings and thoughts, and several other things. In particular, the piano is a very beautiful and peaceful instrument. It has also evolved immensely over time. There were numerous other stringed and keyboard instruments that preceded the piano and eventually led to the development of the instrument as

Instruments of Foreign Policy

1183 words - 5 pages In American foreign policy, security, prosperity, and the creation of a better world are the three most important goals that policy makers try to achieve. To achieve these goals, policy makers use the assistance of foreign policy instruments. The instruments include intelligence gathering, diplomacy, the use of military force, covert action, economic statecraft and cultural and moral influences (18). The instruments fall into two different

Describe the Recognition-By-Components (Geon) theory of object recognition and discuss its strengths as a theory of object recognition

1655 words - 7 pages 5/12/2005 Describe the Recognition-By-Components (Geon) theory of object recognition and discuss its strengths as a theory of object recognitionAtkinson et al (2000) described object recognition as deciding the meaning of an object; it is described as being essential to survival, as if we do not know what an object is, we cannot react to it in an appropriate way. For example, once we realize that the object in front of us is a crocodile, we can

Outline And Evaluate The Principal Weaknesses Associated With Competitive Analysis As Used By Managers Attempting To Deepen Their Understanding Of The Business Environment

1812 words - 8 pages related to those two above. Managers have to keep in mind that the different models used only provide a snapshot of the current state of the industry. It means that models have to be reanalysed after a period of time as they assume the environment to be relatively static. Flower (2004) states that "these relatively static structure do not fit well with today's rapid changes in technology."Managers should not only lay emphasis on their competitors

Discuss some of the obstacles that can hold social workers back, in their efforts to achieve and maintain good practice

1001 words - 4 pages erosion of the human soul. It is malady that spreads gradually and continuously over time, putting people into a downward spiral”. (www.friedsocialworker.com)Stress and burnout are very problematic conditions that can lead to all kinds of implications, making it practically impossible to achieve positive practice. The most effective way of dealing with stress is to recognize its presence and find effective ways of dealing with it.The Social

Discuss the extent to which trade theory can be used to explain the competitiveness of locations

3091 words - 12 pages unrestricted free trade is beneficial to a country. Free trade occurs when a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Smith argued that the invisible hand of the market mechanism, rather than government policy, should determine what a country imports and what it exports. His arguments implied that such a laissez-faire stance toward

Instruments of the Middle Ages

1317 words - 6 pages . When the music composers of this time wrote music, they did not specify which instruments to play; one instrumental could sound completely different depending on what instrument was used (Sporre 335). The musicians of this age were called Minstrels and Troubadours (“Musical Instruments”). Musical Instruments of this time were used mainly for secular songs and music and not with the music of the church. Voices were still what was mainly used in the

Theatre reflects society, questions society, asks society to question itself. How have the Australian plays you have studied used styles and conventions of the theatre to achieve this?

900 words - 4 pages meanings. This is not a simple society but one of injustices. A complex invitation to experience something of the depth of Aboriginal grieving.The Seven Stages reflect political issues at hand. It ultimately stresses the need for rights, using theatre as a tool to connect these issues to society. Delicate sound effects and graphics are used to evoke both traditional and recognisable contemporary family life. In the end at scene 22, the word

Childhood in literature Discuss with reference to either one object type, or a group of objects that constitute the material culture of children

2183 words - 9 pages There seems to be a fundamental epistemological difference between how we regard modern children and how we understand children in the past(Derevenski, JS, 2000)Discuss with reference to either one object type, or a group of objects that constitute the material culture of children.Conspicuous by their presence (or relative absence), and originating from hand as well as industrialised production, furniture and artefacts for children communicate

Similar Essays

Discuss The Extent To Which International Assistance Can And Should Be Effectively Used To Achieve Security Sector Reform As Part Of Post Conflict Peace Building

3491 words - 14 pages to arrive at a clear understanding as to their respective intentions and obligations, including entry and exit points. However, this might be time consuming, but could be worthwhile in fostering the process of sustaining reform and encourage national ownership for lasting peace to be achieved.Further, indigenous/local actors are veritable instruments for effective SSR initiatives facilitated by the donor community. Several international agencies

Description: Argues That Fiscal Policy In Australia Is Shifting Away From Being Used As A Tool Of Macroeconomic Management Towards Being Used As A Political Tool

1161 words - 5 pages /01$2.3 billion cash surplus2001/02$0.5 billion cash surplus2002/03$2.1 billion cash surplusDuring its first two terms in office the Howard Government used fiscal policy as a tool of macroeconomic management to achieve balanced budgets. Fiscal policy was used to reduce public sector debt. By reducing the large amount of public sector debt incurred over the late 1980s and early 1990s the Government ensured that future budgets will focus on

The Limits To Macroeconomic Policy Essay

1454 words - 6 pages crisis are decisions developing economies are constantly facing. A macroeconomic policy can be effective in developing nations, assuming wealth generated is reinvested back into the communities. This reinvestment can be used to improve education and transportation systems. This type of development can assist with poverty reduction and increased opportunities in other industries. South Korea is a prime example of a developing country who improved

A Critical Evaluation Of One Of The Theoretical Approaches Used To Describe Pattern/Object Recognition

1206 words - 5 pages essentially involves a hierarchical system of demons that perform various information processing tasks that eventually lead to the recognition of an image. The pandemonium model involves several simultaneous stages compared to template models, which only involve two stages and looks at more detail when analysing what the particular pattern/object is. It also has the advantage over template models in that with a limited set of feature detectors it can