Monetary Policy and Credit Risk

Economic policies

TABLE OF CONTENTS1.) Explaining the way government can use long term economic policies in order to facilitateeconomic growth. 1200................................................................................................................32.) Discussing why and the way UK government could use fiscal and monetary policy. 1200..5Reference ........................................................................................................................................92

1.) Explaining the way government can use long term economic policies in order to facilitateeconomic growth. 1200Economic policy is known as the action which government can take for growth anddevelopment. It includes setting of the level of tax rate and interest rate, government budgetsand interest rates and various area of government engagement into the economy (Nakajima,Kasuya and Watanabe, 2011). There are different economic policy factor which is divided intofiscal and monetary policy. In fiscal policy there is deal done with government in relation to thetaxation and spending. On the other hand fiscal policy is deal with the central banking actions, itcontrol interest rate and supply of money.There are many government policy then lead to influence economic growth , if it change its longterm and short term growth which can be improved. There are some policy which ensure properbalance in economy is as follows:Investment: The government authority can easily affect the economic growth. It coverseducation market production and infrastructure (Woodford, 2011).Monetary policy: With the help of monetary policy government can easily control ifthere is inflation in extra. Further it include that government enactment of monetarypolicies which keep the growth rate of money dependable. With the use of monetary authority it become easy for the government to control thesupply of cash flow throughout the economy. One of the main goal of an organization is toachieve economic stability (Justiniano and Preston, 2010). Fiscal policy is also known as the economy policy which is used by government in order toadjust the level of spending so that it can easily enhance the level of spending so that it caninfluence a nations economy. The government use fiscal policy in different situation which helpin giving direction to economic goal and objectives. Further with the help of expansionaryfiscal policy the government of UK can easily enhance the expenditure and more than taxrevenue, to finance this borrowing (Kiyotaki and Moore, 2012). The way demand side policieswhich can impact growth through the use of government spending. This need to be done so thatit can try to increase the expenditure in the economy. Further in expansionary fiscal policygovernment can spend more as it earned with the taxation. This lead to imitate the growthbecause if government spend on more on eduction then this lead to create jobs which lead to3

Monetary and fiscal
policy

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Explanation of how monetary and fiscal policy is implemented and how they can be used to
influence GDP and the price level...............................................................................................1
Whether fiscal policy remain key policy instrument in UK in near future.................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Macroeconomic policy is termed to a deliberate attempt related to operations of economy as
whole (Crowley and Hudgins, 2017). Key objective of macroeconomic policy is to deliver stable
economic environment which is conducive to foster strong economic growth comprising
generating employment, creating wealth addition to improving living standards. International
macroeconomic policy is associated to providing steady economic situation which raises
sustainable growth at global level. Key pillars of macroeconomic policy are named as monetary
policy along with fiscal policy. They influence addition to contribute in attaining rapid growth in
economy with aim of reducing poverty in multiple ways. Purpose of the project is to gain
understanding about instruments of ways in which main instruments that are monetary policy
and fiscal policy are implemented addition to look towards options available for policy makers in
countries like UK.
The project explains the ways in which monetary policy and fiscal policy is implemented
and the ways they can be used for influencing GDP together with price level. It further highlights
unprecedented use of fiscal policy in UK presently and in near future.
MAIN BODY
Explanation of how monetary and fiscal policy is implemented and how they can be used to
influence GDP and the price level.
Monetary policy is macroeconomic policy that includes management of money supply
addition to interest rate to achieve objectives of consumption, liquidity and growth. It entails use
of interest rates along with other monetary tools for influencing consumer spending levels and
aggregate demand (Jevđović and Milenković, 2018). In a nation, monetary policy is
implemented for stabilising economic cycle by keeping inflation low as well as avoid recessions.
It is about decisions undertaken by central bank for influencing cost and availability of money in
a particular economy.
Implementation of monetary policy is said to execution of monetary policy decisions
which are made by governing council of a nation. Within UK, Bank of England has
responsibility for monetary policy. It is implemented mainly through adjusting quantity, price
along with maturity of central bank financial resources granted to counter parties, meaning credit
institutions. Counter parties are termed to credit institutions that operate within an economy that
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