Global Macroeconomic Policies: How Monetary and Fiscal Policy Influence GDP and Price Level

Macroeconomic policy

Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
How monetary and fiscal policy is implemented and how they used to influence GDP and
price level...............................................................................................................................3
Whether fiscal policy will remain the key policy instrument in UK during crisis.................6
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9
Books and Journals..........................................................................................................................9

Introduction
Monetary policy and fiscal policy are defined as two widely used tools that influences economy
of different nations. This is known as factor which is related to management of interest rates as
well as total supply for money for circulation. Fiscal policy is termed as collective measure for
taxing and spending actions for government (Agoba and et.al, 2020). Both these policies are
associated with macroeconomic factors that are used for managing and stimulating the economy.
In context of monetary policy, it is concluded that supply of money and interest rates as well as
supply of money for circulation in managed by bank. Fiscal policy helps to address government
spending and taxation which is useful for determining legislations. These are having great impact
upon economy of nation, consumers and businesses.
Main Body
How monetary and fiscal policy is implemented and how they used to influence GDP and price
level
The central banks are involved in typically using monetary policy for stimulating the economy or
checking growth. The economic activities are affected due to the incentivizing of businesses and
individuals (Aye, Clance and Gupta, 2019). This policy can act as barrier for inflation or some
other issue of overheating economy. When economy of any country is going at fast pace than
inflation increases at high rate. The central bank has to manage the circulation as well as
lowering of rate and tightening the money supply.
The central banks use different tools consisting of interest rates for adjusting supply of money
and keeping economy smooth. There are several monetary policies which have lived for many
guises. It is considered that this policy diminishes down after supply of money within economy
for attaining stabilization and inflation combination. There are many economists who have
thought of managing the views for long run (Chadha, 2017). Wages and prices have to adjust in
quick manner so that change within money supply will affect actual production of services and
goods. It is very important that monetary policy must conduct Federal Reserve or European bank
which is known as a meaningful policy tool. It is used for attaining inflation as well as
development objectives.