Monetary and Fiscal Policy: Implementation and Influence on GDP and Price Level

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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