--%>
Assignment Help - homework help

Fiscal and monetary policies in curtailing inflation

Explain the impact of changes in fiscal and monetary policies in curtailing inflation?

E

Expert

Verified

Changes in fiscal and monetary policies in curtailing inflation:

It is highly believed that the changes in monetary as well as fiscal policies can help in curtailing inflation. The suggested monetary policy in order to fix the inflationary issues is Contractionary Monetary Policy. To rectify the extremes of business-cycle extension and handle inflation, an economy could bring down the supply of money and perk up the interest rates. This is attained through trading treasury securities in the open marketplace, increasing the discount rate and incrementing reserve needs. Further, Keynesians asserts that a fall in the supply of money would increment interest rates, bring down spending, bring down Aggregate Demand and lastly, reduce prices and real output. This is eventually help to curtail inflation.

Moving ahead, the suggested fiscal policy to rectify the inflationary issues is contractionary fiscal policy. Contractionary fiscal policy takes in any amalgamation of a decline in government spending, a fall in transfer payments or an increment in taxes. The fiscal policy is proposed to hold back the economy by bringing down aggregate spending and aggregate demand and reduce the level of inflation. According to Keynes, an alteration in government expenditure is the more efficient fiscal policy component, since any modification in government expenditure has a straight impact on AD (aggregate demand).

   Related Questions in Macroeconomics

  • Q : Employment Effect Fiscal policy

    Fiscal policy measures used for achieving full-employment level of output and price include increase in the government expenditure and cut in tax rates. A cut in tax rates eliminates only the adverse effect of high tax rates, whereas an increase in government expendit

    		•
  • Q : Equilibrium The equilibrium interest

    The equilibrium interest rate is determined

    		•
  • Q : Purchasing good according to Law of

    The market price you pay for each and every particular goods you purchase regularly is probably most closely associated with the last unit of each and every good’s: (1) Marginal utility. (2) Total utility. (3) Producer surplus. (4) Consumer surplus. (5) Economic

    		•
  • Q : Shortage of the good Describe when

    Describe when there will be a shortage of the good?

    		•
  • Q : What is Equilibrium quantity

    Equilibrium quantity: It is the quantity supplied and the quantity demanded at equilibrium price.

    		•
  • Q : Stage of the business cycle What stage

    What stage of the business cycle is our economy experiencing at present time? proof your answer.

    		•
  • Q : The market system 1. Examples of

    1. Examples of command economies are: A. The United States and Japan. B. Sweden and Norway. C. Mexico and Brazil. D. Cuba and North Korea.

    		•
  • Q : Problem related to rising GDP Between

    Between 1961 and 2007, the rising share of the Canadian population in paid employment contributed to rising GDP per person. But suppose that the share of the Canadian population in paid employment had remained constant between 1961 and 2007. What would Canadian GDP pe

    		•
  • Q : Why tax considered as revenue receipt

    Why is tax considered as revenue receipt? Answer: Since tax neither makes a liability for government nor decreases assets of the government.

    		•
  • Q : Microeconomics is studying economic

    is studying economic worth your time and effort

    		•