Global Macroeconomic Policies: Implementation of Monetary and Fiscal Policy for Influencing GDP and Price Level

Global Macroeconomic
Policies

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
How monetary as well as fiscal policy is implemented and can be used in influencing level of
price and Gross Domestic Product..............................................................................................1
Fiscal policy as key policy instrument in UK in near future.......................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
International macroeconomics could be described to study of interactions of economies
among countries. It deals with global aspects related to macroeconomic policy addition to
balance cycle (Han, Qi and Yin, 2016). Macroeconomic policy contributes in rebalancing of
growth and emphasises on analysing decisions that are made by countries along with
governments. It assists in understanding about functioning of complicates economic system and
defines the ways in which economy as whole function along with level of national income is
determined as per aggregate demand and supply. There are two pillars of the policy that are
named as fiscal policy and monetary policy. The assessment explains implementation of
monetary and fiscal policy addition to usage for influencing GDP and level of prices. It further
defines whether fiscal policy will remain key instrument in near future in the countries.
MAIN BODY
How monetary as well as fiscal policy is implemented and can be used in influencing level of
price and Gross Domestic Product
In an economy, macroeconomic policy emphasises towards limiting impacts of business
cycle for attaining economic goals comprising full employment, growth along with price stability
(Weale and Et. Al., 2015). One of the pillar of macroeconomic policy is monetary policy that is
modification of money supply that is printing more money addition to decreasing supply of
money through changing interest rates as well as removing excess reserves. Key purpose of the
policy is to make contribution to stability of gross domestic product so to maintain low
unemployment together with maintain predictable rates of exchange with other currencies. It is
implemented by central banks by controlling supply of money via multiple mechanisms. For
instance, monetary policy in UK is implemented and managed by Bank of England who have
Monetary Policy Committee to make decision for it. With implementation of the instrument,
objectives achieved are promoting maximum employment, moderate interest rates in long term
and stable prices. Major instruments of monetary policy are discount rate, requirements of
reserves and open market operations.
Monetary policy effects on available quantity of loanable funds along with interest rates
that impacts on several components associated to aggregate demand (Loewald, Faulkner and
Makrelov, 2019). contractionary or tight monetary policy causes higher interest rates addition to
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