Macroeconomics Report on Policies

Added on - 13 Apr 2020

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Running head: MACROECONOMICSMacroeconomicsName of Student:Name of University:Author’s Note:
1MACROECONOMICSTable of ContentsIntroduction......................................................................................................................................2Answer to Question 1......................................................................................................................2Answer to Question 2......................................................................................................................3Answer to Question 3......................................................................................................................4Conclusion.......................................................................................................................................5References........................................................................................................................................6
2MACROECONOMICSIntroductionThe main aspect of the report aims to discuss on how both fiscal and monetary policiescan be used to restore the equilibrium. Based on the findings it further aims to find, collect,present and analyse the data collected after 2008 from European country which has been usedwith fiscal and monetary policy with a (mix of two) for combating the various aspects to fightrecession. The study has further focused on GDP, unemployment and inflation, explain theextent to which macroeconomic policies helped smooth the recession. The latter part of the studyhas been able to describe the role of the Credit Rating Agencies (CRAs) for the determination ofrisk premium.Answer to Question 1The determination of right mix of fiscal and monetary policy has been assessed with the2001 recession in United States. The consideration of monetary policy has led to increasedsupply of money thereby decreasing the federal funds rate aggressively. This particularbehaviour was persistent throughout the year where the funds which stood at 6.5% in Januarywhich was less than 2% by the end of year. The implementation of fiscal policy was seen duringthe 2000 Presidential campaign, then candidate George Bush ran low on taxes. The mainargument has shown that the federal budget was seen with surplus and thereby keeping sufficientroom for reducing the tax amount and keeping equilibrium in both fiscal and monetary policy.During the presidential position of George Bush, it was clear that the economy was slowingdown and the initiative to curtail additional tax rates led to increased demand for the generalcommodities which helped to tackle recession(Doepke and Tertilt 2016).
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