1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ryzh [129]
2 years ago
14

For each situation, give an example of a fiscal policy and a monetary policy solution. (p. 15)

Social Studies
1 answer:
docker41 [41]2 years ago
3 0

Answer:

Monetary Policy refers to the use of money supply and interest rates by the Central bank of a country to help achieve Economic goals such as inflation, consumption and economic growth. An expansionary monetary policy increases money supply and a contractionary policy decreases it.

Fiscal Policy has the same aim of helping the Government achieve economic goals but this time done by regulating government spending or taxes. An expansionary fiscal policy sees increased government spending and reduced taxes while a contractionary policy sees decreased government spending and higher taxes.

<u>1. Rapid investment during a boom period threatens to overheat the economy. </u>

Fiscal policy solution:  Contractionary Fiscal Policy

The Economy might overheat because of a high amount of investment in production. This means that Aggregate Demand is moving too fast. To rein this in with Fiscal Policy, the Government can increase taxes and reduce spending. This way people have less money to save to be used for investment and companies have less money to do the same.

Monetary policy solution: Contractionary Monetary Policy

The Central bank should reduce money supply and increase interest rates. They can do this by increasing the reserve requirement rate for banks and engage in Open Market Operations to sell securities to the public. This reduction in money supply will increase interest rates thereby reducing the amount of money left for investing.

2. Layoffs lead to an economic slowdown.

Fiscal policy solution:  Expansionary Fiscal Policy

The goal here is to stimulate the economy so that employers can hire more people. The Government can increase spending which would lead to a multiplier effect in income. They should also reduce taxes so that the people can have more money after paying taxes. These two things will have the effect of increasing investment spending which will enable companies to embark on new projects that will increase employment.

Monetary policy solution: Expansionary Monetary Policy

The Central bank should also aim to increase interest rates and money supply at least in the short run. By decreasing the Discount rate as well as the Reserve requirement, and embarking on Open Market Operations where they buy securities from the public, they can increase money supply. This increase in money supply will mean that there is excess money for investment which will lead to increased employment.

You might be interested in
describe some of the central values and benifits that helped shape the emerging cultures of the american colonies. pls someone h
Bogdan [553]

Some of the central values and benifits that helped shape the emerging cultures of the american colonies were The Great Awakening and The Enlightenment

The  Great Awakening refers to some periods of rapid and dramatic religious revival in Anglo-American religious history. Its beginning is considered to have been in 1730. It was also described as a period of revolutions in American religious thought.

The Enlightenment, also known as the century of lights and illustration, was an intellectual and philosophical movement that dominated the world of ideas in Europe during the 18th century.

6 0
3 years ago
In Norway, President Clinton tried to negotiate an end to conflicts between the Palestinians and the _____. a. Iraqis b. Syrians
sweet [91]
In Norway, President Clinton tried to negotiate an end to conflicts between the Palestinians and the Israelis. The correct answer is D. 
7 0
3 years ago
Read 2 more answers
1.According to the United States Constitution, how is the number of Electoral College seats per state determined?
Furkat [3]

C. Is the right answer

6 0
3 years ago
What two parts makeup Location?<br> PLEASE HELP!!!!
RoseWind [281]

Answer:

physical characteristics

7 0
3 years ago
Read 2 more answers
Which of the following was a result of the attack on Pearl Harbor?
velikii [3]
<span>A . The United States entered World War II.  is the answer</span>
6 0
3 years ago
Other questions:
  • Puberty is the physical maturing that makes an individual capable of sexual reproduction. Please select the best answer from the
    15·2 answers
  • Alex and Jaime are in a relationship, and both agree to pursue outside relationships while keeping the relationship between the
    8·1 answer
  • How many years of college to become a children's doctor?
    6·1 answer
  • Most densely populated region of the United States
    14·1 answer
  • Sao Paulo Rio de Janeiro and brasilla are major cities in
    12·2 answers
  • Eva's mother describes her as a mildly active child. She also feels that Eva's mood is marginally negative. According to Chess a
    5·2 answers
  • How did African-Americans respond to the rise of white supremacy groups?
    5·2 answers
  • How did the actions of the Soviet Union towards Korea led to the outbreak of the Korean War?
    15·1 answer
  • Feijoada (national dish of Brazil) can be considered a example of how Brazilian culture was impacted by
    12·1 answer
  • What is itachi uchiha's famous quote
    12·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!