Government and Trickle Down Economics

The assignment discusses the concept of trickle down economics, where business taxes and society's wealth are reduced to encourage investment and benefit society in the long term. The government uses fiscal policy to affect aggregate demand by making changes in taxation and spending, while monetary policy impacts inflation and interest rates. Examples of privatization and entrepreneurship are given as ways for governments to initiate economic growth through trickle down economics.

GOVERNMENTS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
How Governments use both fiscal and monetary policies to stimulate economic activity and
growth using trickle down economics.........................................................................................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
The governments is a group or system which govern people for an organized community.
This report will lay emphasis on trickle down economics theory by using fiscal and monetary
policy in order to stimulate economic growth and activity (Roth, 2017). The report will lay
emphasis on explanation of trickle down economics along with explanation of impact of fiscal
and monetary policy on government. Also, the report will describe about economic growth by
using trickle down theory by some examples.
MAIN BODY
How Governments use both fiscal and monetary policies to stimulate economic activity and
growth using trickle down economics.
About Trickle down economics
It refers to proposition of economics by which business taxes and society's wealth
reduced in order to encourage investment of business in short term and also beneficent the
society in long term (Blair, 2018).
Government uses fiscal and monetary policy to encourage economic activities and growth
The government of every country takes initiative of trickle down economics in order to
stimulate growth of their economy. By fiscal policy the governments affects aggregate demand
by making changes in government taxation and spending (Moulaert, 2018). These factors
influence income of household and employment which impact spending and investment of
businesses. Also, monetary policy impacts on supply of money in an economy that directly
influences inflation and interest rates. This policy also lay impact on expansion of businesses.
For example, government give tax cut to rich people of society and make a budget to
create sustainable future of economy. As the government reduces tax rates of rich background
people of society which directly impacts on more privation in the economy. The people invests
their money in developing their business. These peoples in order to contribute towards society
construct infrastructure in the country like roads, building etc. which used to be a responsibility
of government of country. Therefore, by encouraging trickle down economics government can
saves their time as well as money. The privatization prevails in the economy and it directly
impacts on economic growth of the country (Elliot, and Manwaring, 2018).
The government by adopting trickle down economics also encourages to entrepreneurial
activities. The people use their money to invest more in entrepreneurial businesses and for this
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they hires employees. This will create employment opportunities for people in need of job. Also,
they contribute to GDP by generating revenue in their activities of business. The entrepreneurs
also improves ratio of employment in a particular country. This way the fiscal and monetary
policies of government uses trickle down economics in order to develop and growth in economy.
CONCLUSION
This report was all about how government uses fiscal as well as monetary policy to
encourage economic activity and growth by using trickle down theory. This report started with
an explanation of the theory of trickle down economics. After that the report covers impact of
fiscal and monetary policy on government. Then comes some examples by which government
can initiate growth in economy by using trickle down economics. Example of privatization and
entrepreneurship was taken in this report in order to attain economic growth.
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REFERENCES
Books and Journals
Blair, S., 2018. The hidden tale of north Queensland's red past. Green Left Weekly, (1171), p.22.
Elliot, A. and Manwaring, R., 2018. ‘Mediscare!’: Social Issues. Double Disillusion: The 2016
Australian Federal Election, pp.549-570.
Moulaert, F., 2018. Everything I had wished to know about Walter Stöhr but I missed out.
Roth, D., 2017. 5 Things You May Not Know About Our Tax System.
Online
Trickle down economy. 2018. [Online]. Available through :
<https://www.thebalance.com/trickle-down-economics-theory-effect-does-it-work-3305572>.
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