The Way Governments Use Fiscal and Monetary Policies to Stimulate Economic Activity and Growth

This paper discusses the way governments use fiscal and monetary policies to stimulate economic activity and growth. It explores the concept of trickle down economics and its impact on the global business environment. The paper also examines the role of fiscal and monetary policies in promoting economic growth and the challenges associated with their implementation.

Global Business Environment

Table of Contents
PAPER 1..........................................................................................................................................3
b. The way President Trump's approach to economic policy influence upon foreign economies
like the UK or EU or China....................................................................................................3
Introduction............................................................................................................................3
Main Body..............................................................................................................................3
Conclusion..............................................................................................................................4
PAPER 2..........................................................................................................................................4
c. The way emerging economies are presenting opportunities of global expansion for
businesses...............................................................................................................................4
Introduction............................................................................................................................4
Main body...............................................................................................................................5
Conclusion..............................................................................................................................6
PAPER 3..........................................................................................................................................6
d. The way governments use both fiscal and monetary policies to stimulate economic activity
and growth using trickle down economics.............................................................................6
Introduction............................................................................................................................6
Main body...............................................................................................................................6
Conclusion..............................................................................................................................7
REFERENCES................................................................................................................................8

PAPER 1
b. The way President Trump's approach to economic policy influence upon foreign economies
like the UK or EU or China
Introduction
The economy of China is highly influenced by the Trump's policy. American economic
independence policy is promoted by Trump in response to economic challenges. This paper
defines the seven steps outline by Trump to foster economic growth and influence of economic
policy on foreign economies.
Main Body
The economic policies made by Donald Trump includes illegal immigration reduction,
trade protectionism, corporate and individual tax reform, consumer protection act, disassembly
of Dodd–Frank Wall Street Reform and abrogation of Patient Protection and Affordable Care
Act. The assertive approach of Trump to trade policy has influence the economy of foreign
countries and traditional trading relations. The main aim of formulating economic policy is to
enhance the growth of economy, promote creation of job in U.S. and reciprocity with trade
partners, expand service industry and agricultural exports (Adekola and Sergi, 2016). In order to
foster economic growth and prosperity, seven steps are outlined by president. These includes:
 Withdrawal of United States from Trans-Pacific Partnership (TPP).
 Direct Secretary of Commerce in order to determine violations of agreements associated
with trade and utilize International and American law to ending any maltreatment.
 Appoint hard-bitten trade negotiators.
 Renegotiate and perhaps retreat from North American Free Trade Agreement (NAFTA).
 Instruct Trade Representative of United States to bring trade cases in opposition to China
tackling the violations of World Trade Organisation (WTO) restrictions and rules.
 Enforce taxes and tariffs on nations which are manipulating their currencies actively in
order to gain advantage of United States, and label China a currency operator.
 Utilize aggressive tariffs in opposition to nations which are promoting illegal activities,
like theft of United States trade secrets.

By taking these stance to roll back previous deals associated with trade like KORUS,
NAFTA and deflect the entry in TPP, Trump intents to attain economic independence in U.S. by
reducing trade deficit (Black, Morrison and Gregersen, 2013).
The country is poised to experience substantive change in economy if the policies come
to fruition. United States is one of the leading destination of products made in China, responsible
for around 18 percent of all Chinese exports. In order to maintain and retain trade relations with
United States, the government of China needs to make concessions. The procedure of
renegotiating the existing agreements associated with trade along with enforcement of
international law on economic superpowers like China presents various challenges. China fails to
abide by the existing commitments it made to WTO. The U.S. allies strategy generates
economic costs to China due to non-participation. China has levied tariffs on equal amount of
United States imports and has vulnerable to enforce more (Cavusgil and Knight, 2015). Despite
of the fact that implementation of Trump's policy may enhance economy of United States, the
capability to physically ordain its renters upon trade partners may turn out to be a massive risk.
The economic model of China tilt the situation in a favour of Chinese firms globally as well as
domestically. China reduce tariffs on vehicles which are imported. It resulted in less impact on a
trade as auto makers find it cheaper to develop in country, regardless of tariffs.
Conclusion
As per the above discussion, it can be said that in spite of the fact that the last
compromise may be unproblematic, even a short contradiction in gross domestic product of
China could consequence in widespread corrections in market at global level. A substantive
change in economy of the country is seen due to economic policy of Trump.
PAPER 2
c. The way emerging economies are presenting opportunities of global expansion for businesses
Introduction
The emerging economies are those countries whose economy is growing constantly to
become much advanced. Emerging economies provides various opportunities to companies for
expanding a their business at global level. This paper covers the way emerging economies
provides opportunities to expand business at global level.

Main body
The firms which hopes to capitalize on emerging opportunities in markets at the time of
global expansion requires to initiate by determining those markets which have more potential to
get success. As the emerging markets are progressing or growing, a rapid growth in income is
experience that they set out to generate (Ferraro and Briody, 2017). In a country, as more
individuals within it rise out of poverty, a customer class creates that leads market to full of
consumers who wants new goods and services. Along with the strategically chosen market and
right offering, a firm can expect to enhance its revenues and profits at steady rate. In addition to
this, emerging markets drives global innovation which provides opportunities to companies to
expand their business globally. Companies are now emphasize more on emerging markets as
these enables them to innovate at low cost along with the potential to break off the status quo.
Each market has some potential pitfalls which requires to keep in mind by organisations if they
want to fuel innovation in those markets which are emerging. These pitfalls can be associated
with correct positioning of offering, pricing product or services competitively etc. in order to get
attention of large number of audience. In emerging markets, the chances of become successful
are high.
Emerging markets provides various opportunities to businesses in context of global
expansion. In emerging markets, the demand for new goods are more as these have growing high
class population (Groşanu and et. al., 2015). These people are interested in buying luxury
product that are previously not available in the region. This provides an opportunity to company
to expand its business by offering new innovative product and reach large group of consumers.
Emerging economies provides an opportunities to firms to be a part of growing infrastructure.
For example: Deloitte which is a financial firm that offers its services worldwide, notes that
organisations in emerging markets should expand capability and capacity. As large
organisations develop dams, roads and power plants, small firms step in to offer products and
services that are needed by local people. There are some emerging giants which competes in
various nations like Lenovo groups, Infosys, Koç Group etc.
Emerging markets provides a buffer in opposition to recession to companies. If a firm
operates in single place, then the chances to suffer from economic downturn are more. The
significance of operating business in numerous countries is that firm may not much impacted
from ups and downs in economy. If the profits in one place are down, the branch operating in

another country may cover those losses. For instance: McDonald's, Burger King, Starbucks,
Marks & Spencer etc. all are the companies which are operating in many nations. Economic
downturn at one place may not much affect the performance of company (Khilji, Tarique and
Schuler, 2015).
Conclusion
As per the above discussion, it can be said that emerging markets render a buffer in
opposition to economic downturn to companies. Various opportunities are provided by
emerging markets to businesses. It offers potential to companies for competitive returns and
represents a crucial diversifier for portfolios of investors.
PAPER 3
d. The way governments use both fiscal and monetary policies to stimulate economic activity
and growth using trickle down economics
Introduction
Fiscal policy and Monetary policy are use by government to stimulate the activity and
growth of economy. Fiscal policy includes decisions of government in respect to taxing and
spending. Monetary policy includes government's decisions in respect to supply of money and
interest rates. This paper discusses about The way governments use fiscal and monetary policies
to excite economic activity and growth.
Main body
Fiscal policy is stated as the decisions of government regarding taxing and spending. In
order to stimulate activities and growth in economy, government will increase spending for
products and services. It results in increasing demand, that ultimately increases the production.
In case the production goes up, firms are require to hire more individuals, which increases the
employment rate in country. By this, many people will get job and have money to spend on
products and services. Further, this will increase the demand as well as production and the
growth cycle will continue. In this way, the spending of government speed up the growth of
economy. The another aspect of this policy is taxes. If government decreases the tax rates, then it
tends to stimulate the growth of economy (Popescu, 2013). In order to bridge the decline in
demand, government cut the tax rates or increase its spending which eliminates unemployment
by generating jobs. For instance: Economic Stimulus Act of 2008, in this, efforts are made by

government to grow economy by spending taxpayers 600 or 1200 dollars depending on number
of dependents and marital status. If government does not have adequate amount of revenues in
order to support spending, it have to borrow money from other financial institutions. The trickle
down economics works only if the rates of tax are 50 percent or high.
Monetary policy states the government's decisions regarding supply of money and
interest rates. For maintaining price stability, central bank controls the supply of money. By
using monetary policy, government takes decisions to cut the rate of interest like lower down the
borrowing cost which results in high investment activity. The inflation and interest rates are
influenced by supply of money and both are the determinants of consumption levels,
employment and cost of debt. Central bank is involved in expansionary monetary policy either
by declining interest rates on loans, buying treasury notes or decreasing the reserve requirement.
These actions assist in increasing the supply of money and leads to low rates of interest. By this,
incentives are created for banks and businesses to loan and borrow (Salvatore, 2015). The
investment through employment and consumer spending can positively affected by debt funded
expansion of business and thereby, increase the aggregate demand. The monetary policy makes
the consumption more attractive in regards to savings. Inflation benefited the exporters as their
goods become relatively inexpensive for people in other economies. On the other hand,
Contractionary policy is ordain to halt high rates of inflation or normalising the impacts of
expansionary policy. Consumer spending and business expansion are discourages by tightening
of money supply and adversely influence the exporters which can results in reduce in aggregate
demand.
Conclusion
As per the above analysis, it has been concluded that Fiscal and monetary policies helps
in boosting the activity and growth of economy. It helps in enhancing the growth rate of
economy by maintaining the flow of money in it.

REFERENCES
Books and Journals
Adekola, A. and Sergi, B. S., 2016. Global business management: A cross-cultural perspective.
Routledge.
Black, J. S., Morrison, A. J. and Gregersen, H. B., 2013. Global explorers: The next generation
of leaders. Routledge.
Cavusgil, S. T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business
Studies. 46(1). pp.3-16.
Ferraro, G. P. and Briody, E. K., 2017. The cultural dimension of global business. Taylor &
Francis.
Groşanu, A. and et. al., 2015. The influence of country-level governance on business
environment and entrepreneurship: A global perspective. Amfiteatru Economic Journal.
17(38). pp.60-75
Khilji, S. E., Tarique, I. and Schuler, R. S., 2015. Incorporating the macro view in global talent
management. Human Resource Management Review. 25(3). pp.236-248.
Popescu, G. H., 2013. Macroeconomics, effective leadership, and the global business
environment.Contemporary Readings in Law and Social Justice.5(2). p.170.
Salvatore, D., 2015. Managerial economics in a global economy. OUP Catalogue.