The Role of Fiscal and Monetary Policy in Macroeconomic Objectives

This essay delves into the critical macroeconomic objectives of full employment and economic growth, exploring the role of fiscal and monetary policies in achieving these goals. It examines the importance of government intervention in creating job opportunities and stimulating economic expansion through strategies such as adjusting tax rates and managing interest rates. The essay discusses the advantages and disadvantages of both fiscal and monetary policies, evaluating their effectiveness and identifying factors that influence their success. Furthermore, it highlights the significance of these policies in fostering a stable and prosperous economy, ultimately aiming to improve the standard of living for citizens. The content provides an analysis of the current economic climate and how government policies can be used to achieve the desired economic outcomes. The essay also discusses the benefits of full employment, such as increasing competition in the market and the ability of skilled workers to demand higher wages, and the impact of economic growth on tax revenues and job creation.

Macroeconomic

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
There are two key government policy objectives that are, full employment and achieving
economic growth. It is important that government should take necessary steps for improving job
opportunities and all people must get jobs. It will help in growth of nation and economy will also
grow. Full employment is important because it is a situation in which all resources that are
available will be used efficiently and employees will try to reduce wastage. Everyone should get
jobs and do work as it will help in growth of economy (Al-Masaeed and Tsaregorodtsev, 2018.).
It will increase competition among companies and start searching best candidate for their
organisation. Another key government policy objective is achieving economic growth. It can be
achieved by reducing interest rates i.e., cost of borrowing and customer spending must be
increased. Real wages should increase so that consumers can buy more and they can purchase
essential commodity if there is inflation.
Fiscal policy and monetary policy will enable government in achieving their objectives i.e., full
employment and economic growth. Changes in tax rates to increase employment, price stability
and help in achieving economic growth. When tax rate will be decreased more people get jobs
because employees do not have to give tax on their income or less tax is to be given. Companies
will recruit more employees and they will work efficiently. Monetary policy helps in achieving
objectives of government as interest rates and inflation should be controlled so that people can
get good job opportunities and it will help in economic growth because consumers will purchase
more things and sales of company will be increased (Altavilla, Boucinha and Peydró, 2018).
In the essay two key government policy objectives will be discussed, full employment and
achieving economic growth. Role of fiscal policy and monetary policy in achieving these
objectives and factors which are influencing chances of success. Further, advantages and
disadvantages of fiscal and monetary policy will be described and their effectiveness is being
measured. Some factors which influence success of these policy objectives are discussed and
importance of fiscal and monetary policy in accomplishing objectives.
MAIN BODY
Analysis of two key government objectives
It is important that government should take necessary steps which is beneficial for growth and
development of nation as well as economy. There are many areas in which improvement is

needed so that overall economic growth can be achieved and it will help in reducing
unemployment. Nowadays, students are doing hard work and getting many degrees so that they
can get good jobs in future and goals can be accomplished. But in this fast moving world,
competition is increasing rapidly and it is difficult to survive because there are many people who
want jobs. Everyone want to live their life happily so they need money and earning money is not
easy. This is one of the key objective of government policy which they want to accomplish
because in the country, there are many people who are not having jobs and this lead to decrease
in growth of economy (ALZYADAT and AL-NSOUR, 2021). For development of nation it is
important that necessary steps must be taken by government to improve situation of people and
increase employment rates. When more persons will get jobs then it will help in bringing new
and innovative products in market. Different people have various ideas and if they all will work
as a team then better products can be made and it will help in satisfying needs of consumers. If
people will like the product then more customers will buy it and this will lead to increase in sales
of company and overall performance of country will improve. New generation people are having
better ideas and they are giving suggestions according to taste and preference of consumers.
There are some benefits of full employment such as, it will help in increasing competition in
market because organisations will try to find out best candidate and this will lead to increase in
job opportunities. More people get job and they can live their life happily. When demand of
employees is increase in market then skilled workers can demand for increase wage rate, they
will get more benefits because if a company want to get skilled employees then they have to pay
them good wage rate and also provide them additional benefits. Government can increase
employment by taking some steps such as, reduce interest rates, job creation statistics, use fiscal
policy and monetary policy, spend some amount on unemployment benefits, give some benefits
to employees, tax rates should be cut for new joiners, spend more amount on public works
(Aslam and Awan, 2018). These are some steps which government should take so that
employment can be increased and it will lead to economic growth.
Another key objective of government is to accomplish economic growth which means to
improve living standard of people. For every nation it is important to increase economic growth
because it reflects that all things are perfect in the country like, employment, price stability and
people are living their life safely. Economic growth also creates high tax rates due to which
people are not able to spend money. It helps in reducing borrowing of government and it also

reduces debt to GDP ratios. Economic growth plays a crucial role in development of country by
reducing unemployment and government try that every person should get good job so that
overall economic growth can be achieved. Economic growth plays a important role for
developing countries because it increases demand of products and managers recruit more
employees which increase demand of candidates and employment increases. Economic growth
refers to overall development of country and it is important that government should take
necessary steps so that goals and objectives can be achieved. Economic growth is a macro
economic goal because in this government take actions which will affect whole economy and
overall performance will be improved (Bernanke, 2017). It enables improve tax revenues, help in
creating new job opportunities for freshers as well as for people who are searching jobs, increase
living standard of people because if there are jobs then consumers will spend money in
purchasing products and satisfy their needs. It is important that government should take
necessary steps so that good services can be provided to people and they can job opportunities
which is beneficial for development of economy.
Role of Fiscal and monetary policy
There are many objectives of government which they want to accomplish and taking essential
steps one by one so that people can get good jobs and unemployment will be reduced. Two key
objectives of government policy are, full employment and economic growth. To achieve these
goals essential steps should be taken by government so that they can help people in getting jobs
and they can buy more products (Twinoburyo and Odhiambo, 2018). Tax rates should be less
because if people are earning less and they are paying huge amount of tax, no money will be left
to spend and they are not able to fulfil their needs and family needs are not fulfilled. So,
government should reduce tax rates so that people can purchase products according to their
requirements and live life easily.
Fiscal policy refers to estimation of tax revenues and spending of government which have impact
on economy (Bernanke, 2020). There are three types of fiscal policy i.e., neutral, expansionary
policy and contractionary fiscal policy. This policy is mostly used at the time of unemployment
or recession. It helps in increasing job opportunities and this will lead to increase in employment
rates. There are three tools of fiscal policy such as, government spending, tax rates and transfer
payments. These tools help in influencing demand like if government will spend more money in
development of country then people will get good facilities and it will help in economic growth

of nation. If tax rates are reduced then consumers will buy more products because they will save
money and buy essential commodities to satisfy their needs. Fiscal policy is generally used to
promote sustainable growth and helps in reducing poverty. When people are not having earning
source and there are no jobs available in market, then government take actions to improve
situation of country and provide job opportunities to persons. Some main components of fiscal
policy are, tax revenue, deficit containment, expenditure, determining fiscal transfer. Fiscal
policy plays a crucial role in achieving full employment by maintaining high rate of economic
growth, increase wages or prices of employees, reduces taxes and expenditure. It is affecting
overall economy because fiscal policy is total production i.e., GDP. The purpose of fiscal policy
is to raise demand for products and more customers should buy. Experience employees demand
for high wages and if ac company want to recruit them, they have to pay wages as per the
demand of workers.
Monetary policy helps in managing supply of money in country as there should be proper flow of
money in economy. Monetary policy is part of macro-economic which is controlled by central
bank. It includes management of money supply, banks decide interest rate on the basis of which
people take loan (Chugunov and Makohon, 2019). If interest rate will be high then consumers
will face difficulty in taking loan as they are not able to pay and this will lead to reduce in buying
power of people. If there is inflation and employees are not having high income then they will
not able to purchase goods or services to fulfil their needs. Monetary policy plays a crucial role
in economic growth as reduce fluctuations in prices and proper balance must be maintained
between demand of money in market and capacity of economy. It is the responsibility of
government to handle situation and there must be proper flow of money so that people can fulfil
their needs and it will help in overall development of country. Monetary policy helps in
increasing liquidity to prevent inflation, banks are using interest rates, bank reserve requirements
and all the activities are being handled by government. So, they should take necessary steps
which will be beneficial in growth of country and government can achieve its gaols and
objectives by taking correct actions or improvements can be made so that better services can be
provided to people.
Advantages and disadvantages of fiscal and monetary policy
Fiscal policy can be defined as a policy which is controlled and managed by government by
evaluating nation’s economy and essential steps should be taken so that goals can be achieved. It

is important that government should identify areas where improvement is required and make
plans according to that as it will help in satisfying needs of consumers and better services can be
provided. Fiscal policy can be used to improve overall economic growth by increasing spending
of government, decrease in tax revenues and take actions so that better services can be provided
and it will help in improving employment rates and economic growth will be increased
(Jarociński and Karadi, 2020). Advantages of fiscal policy are, it will help in reducing budget
deficit. In some countries such as UK, having large budget deficit so fiscal policy will help in
reducing inflation and government will take necessary steps to reduce inflation and control the
situation. It also helps in reducing poverty because if more people will get job opportunities then
it is easy for all to earn money and they can satisfy their needs by purchasing products according
to their requirement. It is effective as by decreasing tax rates and providing employment to
people all problems are solved and it will help in achieving goals and objectives of government.
Disadvantages of fiscal policy are, chances of conflicts because when government is using both
expansionary policy and contractionary then there are some issues which arise. Both the type of
fiscal policy are different from each other and if they are combined or mix then it is common that
problem will arise. Some people will say expansionary is best and others will prefer
contractionary (McKibbin and et.al., 2020). So, it will be difficult for government to take
decision and choose correct option which is beneficial for all. There is delay in results, level of
spending is changing and political pressure so, there are chances of taking wrong decisions.
Monetary policy means to reduce interest rate for benefit of people as they ca take loan easily
and purchase essential commodities. It help government in making plans or strategies which is
beneficial for growth of economy and also help in full employment. Advantages of monetary
policy are, it bring out some chances of more investments and increase buying power of
consumers. It will allow to purchase bonds of governments from banks, borrow money from
banks and interest rate on loan will be low. When a person will take loan they have to pay low
interest and it is easy for them to borrow money from financial institutions and this is beneficial
for creditor as well as for investors. It will promote low inflation rates, transparency and helps in
promoting political freedom (Mugableh, 2019). Disadvantages of monetary policy are, it does
not give guarantee for economic recovery, this policy is not helpful at the time of recession. It
take time while implementing policy because there are many changes that government has to
make according to the situation and take essential steps which is beneficial for growth of

economy. This policy can be effective if proper planning is done by government and they make
changes in policies so that better services can be provided and it will help in development of
economy. For improving situation for nation, it is the duty of government that correct steps
should be taken to improve overall condition of country. Every plan has some negative as well as
positive points but government should not think about anything they must take decisions which
is beneficial for all and it will help in achieving goals and objectives. It is the duty of government
to make plans which is essential for development of country and try to improve strategies so that
there will be no problem in future and all the people can get jobs. If everyone will have jobs and
they are earning so they can spend their easily and purchase products which they want and
satisfy their needs (Olowofela, 2021).
Factors influence chances of success
There are many factors which influence chances of success such as, crude oil, monsoon, global
growth, fiscal deficit, and many other factors. These are some factors which will influence
chances of success by applying fiscal policy and monetary policy (Ugwuanyi and Ugwunta,
2017). It is essential that government should try to improve condition of nation and try to
identify reasons why this is happening. Every country want that they should be best and their
economic growth must be good because it reflects overall situation of economy. When
government is making plans or strategies for developing economy they should identify market
condition and according to that make plans. It will be beneficial for nation if all people are
having jobs and there is no poverty. It is the responsibility of government to determine in which
areas improvement is required and make strategies according to that. This will help in increasing
GDP of country and take actions regarding employment opportunities (Pasichnyi, 2017). Some
factors which will influence monetary policy and fiscal policy are, crude oil, monsoon, global
growth. This will influence policies and help in improving condition of nation. It will help in
providing employment to persons because if there will be more companies then they do
recruitment and persons who want job can apply.
There are many ways by which government can increase job opportunities for people and reduce
poverty. In some countries there are many people who are not having earning source, they are
finding jobs and try to earn money so that they can live their life properly. It is important that
correct actions must be taken to increase jobs in market and take care that every person is having
food to eat and try to reduce poverty. In some countries there are many people who are not

having money to eat food properly and they are searching for job. Fiscal policy and monetary
policy are best for achieving goals and objectives of government. To provide employment
opportunity to people government has to take steps and they should try to reduce tax rates so that
earning of employees can be saved. This will help in reducing poverty and beneficial for all. In
every country, government should identify problems and try to solve it as soon as possible
because if it is not solved then later it can create problem (Saqib and Aggarwal, 2017). When
there will be demand for products then demand for employees will be increased and that will be
the best time for people to grab the opportunities. These factors also help in influencing
government so that they can take good decision and it will help in making good plans to
accomplish goals and objectives. It is important to identify needs of people and according to that
jobs should be provided so that it will be easy for them to grab the opportunity.
CONCLUSION
From the above discussion it can be concluded that, there are many problems in a country and
government has to face the situation and try to find solutions so that it will not affect economy.
There are two key objectives of government policy i.e., full employment and economic growth.
These are two main problems which is faced by every nation because there is shortage of jobs
and this lead to increase in unemployment rates which affect development of nation. It is the
responsibility of government to take essential steps to accomplish goals and objectives. Analysis
of key objectives has been discussed. Fiscal policy and monetary policy have been described
which includes, how it helps government in achieving goals and objectives. Further, role of fiscal
policy and monetary policy has been discussed and how government make plans so that they can
provide better services to people and increase job opportunities. Advantages and disadvantages
of fiscal policy and monetary policy has been discussed and its effectiveness. Factors which
influence chances of success are also described and how it influence government to take
necessary steps.

REFRENCES
Books and Journals
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