Global Macroeconomic Policies: Fiscal and Monetary Policy Implementation in UK

MACROECONOMIC
POLICIES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Fiscal policy.................................................................................................................................3
Implementation of fiscal policy through taxes............................................................................3
Benefits of fiscal policy implementation.....................................................................................4
Other measures of fiscal policy...................................................................................................4
Monetary policy...........................................................................................................................5
Implementation measures of monetary policy.............................................................................5
Difference between monetary and fiscal policy..........................................................................7
Unprecedented Fiscal policy in recession....................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The report is on macroeconomic policies in UK. The difference between fiscal and monetary
policy and their implementation has been explained with their use in influencing GDP and price
level is talked about. The unprecedented change in UK fiscal policy is also discussed.
Fiscal policy
Spending of administration and policy of tax are used for influence economics condition like
demand that is aggregate for services and goods, inflation, employment and economical growth.
It includes the usage of taxation, administration expenditure, and management of debt for
achieving certain objective. It includes income and expenditure managing, and also
administration debt, financing deficit, tax structure (Chapman, 2020).
Implementation of fiscal policy through taxes
The tax is collected on three levels: at the federal, state, and local levels. A tax is an obligatory
contribution given to the government by a person or organization to cover the costs of welfare
program.
The allocation of taxes between the states and the centre is done in advance, and tax is collected
as a result.
There are two aspects to the tax system:
a) Government-imposed taxes, such as duties of customs , income tax, corporate tax.
b) State-imposed tax, both indirect and direct.
Tax collection for the benefits of the public as well as on import. Macroeconomics involvement
are the political relationships that exist among nations and, with result, the tariff customs
imposition, that can be large or low which depends on the connections of countries.
Benefits of fiscal policy implementation
Payments to the administration for benefits of future is there. Among them are unemployment
insurance payments and supplement, accidental insurance, disability and pensions of old age,
medical bill reimbursements, allowances of family and the provision of medical services
(Nelson, 2020). The monies shall be utilized for fund social benefit and transferred to
administrative bodies responsible for delivering those. Due to this, it may be regarded as a

government-related investment with returns of future measured in percentages of GDP and
taxation.
Effect on GDP and price rise
When government increases spending on goods and services, rise will be seen in demand for
goods and services. A decrease in spending of government will lead to an overall decrease in
GDP and price (Chapman, 2020).
Other measures of fiscal policy
Public expenditure deficit
Government expenditures on social welfare programs are referred to as "public expenditure."
When government spends excess of revenue, a budget deficit emerges, resulting in a lack of
money for public programs of the time. As public savings remain positive, budget is considered
extra; when being negative, the budget is considered deficit. It may be tied to market spending
trends, like when uncertainty causes people to spend less and save more, and economy is doing
well, people spend more and save less.
Sustainability of public debt
If the national debt can meet its current and future responsibilities to the public and national
welfare, it is considered to be sustainable. In development activities and projects, debt should be
utilized with caution so that loans to national social protection programs can be leveraged, as is
the case with financial organizations. Debt shall be utilized legally for project and development
operations, but it must be balanced for debt not becoming excessive and the organisation fails.
Because interest rates are linked to debt, the government must exercise caution when entering
into loan agreements with foreign countries on clear terms, aiming to get loan of low interest
rates which can be paid again and debt which can be utilized in full in the time allotted.
Financing of debt can be used to benefit the public, not to prove a point and slowing the
economy for gain of short-term (Ballabriga and Davtyan, 2017).
Monetary policy
The policy controls interest rate charged on short-term borrowing. The central bank is primarily
responsible for managing the money supply, which includes credit, currency, and mutual funds.
To regulate market liquidity, the central bank employs money tool like the rate of repo, reserves
of cash, and SLR in banks, as well as reverse repo rates. The policy is utilised to control