--%>
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 : Fiscal policy actions What possible

    What possible fiscal policy actions can be taken with respect to expenses and income to accurate excess demand and deficient demand in economy? Answer:

  • Q : International trade the most frequently

    the most frequently asked question on foreign direct invetment

    		•
  • Q : Supply law and it's factors State the

    State the Law of supply and explain the factors that affecting supply of commodity

    		•
  • Q : Inflation movements and factors Use

    Use economic theory to explain the inflation movements and factors influencing it. Use relevant models to explain the impact of changes in fiscal and monetary policies in curtailing inflation.

    		•
  • Q : Stock option price-Strike price-Put and

    What do you mean by the following terms: a stock option price, strike price and what are a put and a call?What is the merits or demerits of purchasing stock options over stocks? What function do Mutual Funds execute with Stock Market

    		•
  • Q : One party to a transaction deceives

    If one party to a transaction deceives another party prior to a deal be reached, this is termed as: (i) Bad luck. (ii) Adverse selection. (iii) Moral hazard. (iv) Polyandry. (v) Rational ignorance. Please someone suggest me the rig

    		•
  • Q : Define bank rate policy Define bank

    Define bank rate policy? How does it operate as a technique of credit control? Answer: Bank rate is the rate at which the central bank provides loans to the commerc

    		•
  • Q : What is Equilibrium quantity

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

    		•
  • Q : Physical quality of life index DISCUSS

    DISCUSS the experience of high GNP countries and low GNP with regard to PQLI.

    		•
  • Q : When people purchase goods People will

    People will purchase goods when their demand prices equivalent or surpass: (i) Transaction costs. (ii) Subjective prices. (iii) Price indexes. (iv) Market prices. (v) Wholesale prices. Please someone suggest me the right answer.

    		•