Impact of Fiscal and Monetary Policies on Global Business

This report provides an overview of the global business environment, focusing on the implementation of fiscal and monetary policies to stimulate economic activity. The introduction defines the global business environment and highlights the importance of these policies. The main body of the report delves into the specifics of monetary and fiscal policies, explaining how they influence a nation's economy through money supply, interest rates, government spending, and taxation. The report uses the Australian context as an example, detailing the roles of the Reserve Bank of Australia and the government in implementing these policies to stabilize the economy and promote growth. The conclusion summarizes the impact of these policies on maintaining a balance between public spending and tax rates, aiming to create a stable economic environment for growth. The report includes references to academic sources supporting the analysis.

Global business environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Implementation of Fiscal and monetary policies to stimulate economic activity.......................1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
The global business environment refer the environment and multiple sovereign nations in
which an organisation operates. It has internal & external environment that includes economic,
social, tax etc. This study will show the importance of implementation of fiscal and monetary
policies (Argy and Nevile, 2016).
Implementation of Fiscal and monetary policies to stimulate economic activity
Monetary policy and Fiscal policy are 2 main tools which are being used to influenced a
nation's economic activity. Monetary policy is concerned and addresses money supply & interest
rates which is managed by central bank (Ćorić, Šimović and Deskar-Škrbić, 2015). On the other
hand Fiscal policy addresses government spending & taxation. They both have a significant
impact on a nation's economy. A government can increase and decrease the demand in the
economy. For example, if a government wants to stimulate growth in the economy then it
increases spending for services & goods which increases demand for services & goods. On the
other hand a decreases in government spending leads to can decreases the demands in the
economy.
Monetary policy of Australia is main economic policy that is to stabilise business cycles.
In Australia, Reserve Bank is responsible for this policy as it sets the nation's official interest
rates (Li and Spencer, 2016). The main aim of implementing monetary policy of Australia is to
make the stability of currency of Australia and also to maintain full employment in order to
welfare of the people of that country. Reserve bank of Australia implement monetary policy by
undertaking transactions in domestic money market. By interacting with commercial banks, it
controls its cash rates. It implements this policy by stepping through 5 main aspects related to the
cash market such as: demand, quantity, price, policy interest & supply.
The main purpose of Australia of implementing fiscal policy is to maintain full
employment and also achieve a higher rate of economic growth. This policy can affect the share
market in various ways. When a government wants to stimulate economic growth then it
decreases taxes (Afonso, Baxa and Slavík, 2018). Due to decrement in taxes people either spend
money or save. If they spend money then it leads and increases demands and business tend to
have produce more. If they require to produce more then they require to hire more people which

provide them employment. Whereas, if people do not spend money and they save then they put
that money in bank. On that money, bank provide the loan the money which are being deposited
by public and borrowers spend it. If the government do not have enough revenue in order to
support spending then it needs to borrow money. Government borrowing impacts on interest
rates as it increases interest rates which discourages people and businesses.
CONCLUSION
From the above study it has been concluded that monetary and fiscal policy impacted and
influenced nation's economy in order to maintain a balance between public spending & tax rates.
Aim of these policies are to create and economic environment in order to make growth stable.

REFERENCES
Books and journals
Afonso, A., Baxa, J. and Slavík, M., 2018. Fiscal developments and financial stress: a threshold
VAR analysis. Empirical Economics. 54(2). pp.395-423.
Argy, V.E. and Nevile, J., 2016. Inflation and Unemployment: Theory, Experience and Policy
Making. Routledge.
Ćorić, T., Šimović, H. and Deskar-Škrbić, M., 2015. Monetary and fiscal policy mix in a small
open economy: the case of Croatia. Economic research-Ekonomska istraživanja. 28(1).
pp.407-421.
Li, S.M. and Spencer, A.H., 2016. Effectiveness of the Australian fiscal stimulus package: A
DSGE analysis. Economic Record. 92(296). pp.94-120.