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3. The balanced-budget multiplier indicates that equal increases in government spending and taxation will increase the equilibrium NNP by the amount of the increase in goverment expenditures and taxes.
4. Built-in stability refers to the fact that net tax (NT) revenues vary directly with the level of NNP. Therefore, during a rescession the public budget automatically tends toward a stabilizing deficit; Converserly, during expension the budget automatically tends toward an anti-inflationary surplus. Built-in stability ameliorates, but doesn't correct, undesired changes in the NNP.
5. The full-employment budget indicates what the Federal budgetary surplus or dificit would be if the economy operated at full employment throughout the year. The full-employment budget is a more meaginful indicator of the government's fiscal posture than is its actual budgetary surplus or deficit.
6. The enactment and application of appropriate fiscal policy and subject to certain pro-blems and question. Some of the most important are these
a) Can the enactment and application of fiscal policy be better timed so as to maximize its effictiveness in heading off economic fluctuations?
b) Can the economy rely upon Congress to enact appropriate fiscal policy?
c) An expansionary fiscal policy maybe weakened if it crowds out some private invest-ment spendig;
d) Some of the effect of an expansionary fiscal policy maybe dissipated in inflation;
e) Fiscal policy maybe rendered ineffective or inappropriate by unforeseen events occuring within the world economy. Also fiscal policy may precipitate changes in exchange rates which weaken its effects;
f) Suplly-side economists contend that Keynesian fiscal policy fails to consider the effects of tax changes upon AS.
Monetary Policy
1. Like fiscal policy, the goal of monetary policy is to assist the economy in acdheiving a full-employment, noninflationary level of total output.
2. For a consideration of monetary policy the most important assets of the Federal Reserve Banks are securities and loans to commercial banks. The basic liabilities are the reserves of member banks, Treasury deposits & Federal Reserve Notes.
3. The three major instruments of monetary policy are
a) open-market operations;
b) changing the reserve ratio;
c) changing the discount rate;
4. Minor selective controls involve the margin requirement, consumer credit & moral suasion.
5. Keynesians envision monetary policy as operating through a complex cause-effect chain
a) policy decisions effect commercial bank reserves;
b) changes in reserves effect the supply of money;
c) changes in the supply of money alter the interest rate;
d) Changes in the interest rate affect investment, the equilibrium NNP and the price level;
6. The advantages of monetary policy include its flexibility and political asseptability. Further, monetarists feel that the supply of money is the single most important determinant of the level of national output.
7. Monetary policy is subject to a number of limitations and the problems
a) They excess reserves which an easy money policy provides may not be used by banks to expend the supply of money;
b) Policy-instigated changes in the supply of money maybe pertially offset by changes in the velocity of money;
c) The impact of monetary policy will be lessened if the money-demand curve is flat ant the investment-demand is steep. The investment-demand curve may also shift so as to negate monetary policy.
8. The monetory authorities face a policy dilemma in that they can stabilize interest rates or the money supply but not both. In the post-World War II period monetary policy has shifted from stabilizing interest rates to controlling the money supply and more recently to a more progmatic position.
9. The impact of an easy money policy upon domestic NNP strangthed by an accompa-nying increase in net exports precipitated by a lower domestic interest rate. Likewise, a tight money policy is strengthed by a decline in net exports. In some sircumstances there maybe a trade off between the use of monetary policy to affect the value of the dollar and thus to currect at rage imbalance and the use of monetary policy to achieve domestic stability.
Реферат опубликован: 12/11/2009