logo

Role of Fiscal and Monetary Policies in Growth of Economy

   

Added on  2020-06-04

14 Pages4150 Words28 Views
ECONOMICS FORBUSINESS

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11. Role of UK government To facilitate economic growth.........................................................1TASK 2............................................................................................................................................62. Use of fiscal and monetary policies in stimulating temporary economic growth...................6CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11

INTRODUCTION Economy of an country can be defined as the capacity of production and deliveringservices by an economic system is called as its rate of economic growth in specific period oftime. Government policies largely influence growth of country economy to large extent. Varioussupply side policies largely contributes in growth of country. The various policies of governmentwhich increases supply of products in UK are like decreasing tax rate, regulating interest rate forborrowings helps in development of economy of country (Babor and et.al., 2013). This helps innachieving the higher growth rate in country and provides an growth opportunities for foreigninvestors.In this particular report various type of supply side policies are studied in order tofacilitate economic growth in country. Role of UK government in implementing these policiesare also described in following report. This specific assignment also deal with various fiscal andmonetary policies. Different role of fiscal and monetary policies in growth of economy isdescribed through defining aggregated supply and aggregated demand in country. These fiscalpolicies deals in controlling tax on products and services in order to achieve an equilibriumsituation in supply and demand of product in UK.TASK 11. Role of UK government To facilitate economic growth.Supply side policies are implemented by government in order to increase the GDPgrowth in country. These policies help in enhancing the investment proper of business in market.Supply side policies are carried out in free market. The free market is comprise of productiveactivities with lower interference of government in the commercial actions. Supply side policiesare implemented by government in order to enhance the entrepreneurship in marketplace andbrings high GDP growth. Supply side policies are enforced by government in order to facilitateeconomic growth development of UK (Baker and Hoekstra, 2010). This policies defines thesupply capability of an economic system and ability to produce and attain an higher productiverate in country market. In order to attain an profitable results from supply side policies thegovernment has to reduce taxation with help of these policies and encourage the entrepreneursresulting in enhancing the investing powers of national and foreign investors in country. This1

will ultimately contribute in higher production which helpful in accomplishing high demand ofproducts and services in UK efficiently and contribute in attainment of growth in GDP rate.In the conditions when country is not accomplished its employment carrying capacitythey supply side policies can be useful in shifting supply curve to right in order to enhance thequantity of production at lower prices (Bakke and Endal, 2010). This can be stated thatemployment carrying capacity of an country is total employee numbers which can work incountry, this referred as employment level. In order to shift the aggregate supply towards rightsupply side policies in free market plays an important role until the employment level is notfulfilled.It can be also seen that execution of supply side policies by government in UK marketleads to an right side shift of LRAS curve i.e. Long run supply curve. This will facilitate inincrease in GDP through enhancing quantity of production in market. Long run aggregatedsupply can be shown in prices v/s quantity graph and straight line parallel to the Y axis. Thisdefined that with increase or decrease in price which does not affect level of aggregate supply inlong run. Supply side policies shift this graph to which which produce higher quantity at lowerprices which contributes in increase gross national product of UK.2Source 1 Aggregate supply. 2017

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Analysis of Income and Employment Levels in the United States
|4
|726
|165

Global Macroeconomic Policies: Implementation of Monetary and Fiscal Policy for Influencing GDP and Price Level
|10
|2666
|257

Development of Economy for Business | Report
|14
|4140
|213

Role of Fiscal and Monetary Policy in UK
|21
|1008
|71

Introduction to Economics for Business
|14
|4043
|250

Economic Policy and the Global Government
|8
|1876
|477