State and explain macroeconomic policies used by the government to deal with macroeconomic problems.

      

State and explain macroeconomic policies used by the government to deal with macroeconomic problems.

  

Answers


John
1. Fiscal policies.
This is the deliberate government intervention in economy through the use of changes in taxation and changes in government expenditure to influence economic outputs. The government increases its spending or reduces the level of taxes to increase aggregate demand and thereby expand the economy. These policies which influence economic outcomes from demand perspective are referred to as demand - side policies.

2. Monetary policies.
This is the deliberate government intervention in economy through the use of changes in money supply to influence economic outcomes. To expand the economy the government can increase money supply which leads to reduction in interest rates,leading to increase in investment and consequently lead to economic expansion.

3. Growth policies.
These are policies which stimulates aggregate supply of outputs and they creates incentives for more work, for more investments and for more savings. More work,incentives and savings leads to supply more goods and services. These policies are known as supply - side policies.
Jonmhumble answered the question on November 16, 2017 at 11:34


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