In an effort to move the economy out of a recession, the federal government would engage in...

Question

In an effort to move the economy out of a recession, the federal government would engage in expansionary economic policies. Respond to the following points in your paper on the actions the government would take to address expansionary fiscal and monetary policies:

Expansionary Fiscal Policy:

Explain the actions the federal government would take while engaging in expansionary fiscal policy in terms of the following:

The necessary change in taxes and government spending,
The effect on aggregate demand, GDP, and employment.

Expansionary Monetary Policy:

The three tools the Federal Reserve Bank (The Fed) uses when conducting monetary policy are the required reserve ratio, the discount rate, and open market operations.
Explain the actions of the Fed in regard to the three tools.

When the required reserve ratio is increased or decreased
When the discount rate is increased or decreased
Buying or selling government securities when conducting expansionary monetary policy

Explain how these actions would affect the money supply, interest rates, spending, aggregate demand, GDP, and employment.
Writing the Final Paper

Must be eight double-spaced pagesor morein length and formatted according to APA style as outlined in your approved styled guide.
Must include a title page that includes:
1. Title of paper
2. Student’s name
3. Course name and number
4. Instructor’s name
5. Date submitted
Must include an introductory paragraph with a succinct thesis statement.
Must address the topic of the paper with critical thought.
Must conclude with a restatement of the thesis and a conclusion paragraph.
Must use at least four scholarly resources, including the textbook. Two sources must come from the Ashford Library.
Must use APA style as outlined in your approved style guide to document all sources.
Must include, on the final page, a reference List that is completed according to APA style as outlined in your approved style guide

David · Accepted Answer

Expansionary fiscal Policy: 
Expansionary fiscal strategy involve government attempt to amplify collective 
demand. It will engage higher administration expenditure and/or lesser tax. In hypothesis, 
superior government expenditure will enlarge collective demand AD=(C+I+G+X-M) and 
guide to superior economic enlargement.AD=(C+I+G+X-M) and lead to advanced economic 
enlargement. Lower taxes have to enlarge the not reusable income of customers foremost to 
upper levels of customer expenditure. This should also raise collective demand and could 
guide to high economic growth. 
Expansionary fiscal policy can also guide to price rises because of the higher require in the 
financial system. 
July 25
th
, 2017, Tejvan Pettinger, “Impact of Expansionary Fiscal Policy” 
https://www.economicshelp.org/blog/617/economics/impact-of-expansionary-fiscal-policy/
The necessary change in taxes and government spending: 
The Federal Reserve’s response to potential fiscal policy change has been much additional 
careful than that of the markets, however. Janet Yellen in December describe the central bank 
as functioning below a “cloud of uncertainty,” and the forecasts of Fed policymakers at large 
after the December FOMC assembly show little change in moreover their
INCORPORATING POSSIBLE FISCAL POLICY CHANGES INTO THE 
ECONOMIC FORECAST 
As a wide-ranging substance, Fed policymakers vision economic or policy development from 
side to side the prism of their financial forecast. Developments that drive the forecasted path 
https://www.economicshelp.org/blog/617/economics/impact-of-expansionary-fiscal-policy/
of the financial system away from the Fed’s service and inflation goals need a compensate 
policy response, another change do not. As a result, to measure the suitable monetary reaction 
to a new fiscal plan, Fed policymakers primary have to appraise the probable effects of that 
plan on the economy in excess of the next couple of years. 
Financial policy influence the economy from end to end a lot of channels. The econometric 
model used at the Fed for construct forecasts tend to sum up fiscal belongings in terms of 
change in aggregate demand or aggregate supply. For example, a increase in expenditure on 
public communications, or a tax cut that prompt customers to expend more, increase require. 
Fiscal policies also affect combined provide, for example, from first to last the incentive 
provide by the tax code. To plan the force of a future fiscal pack up on the economy, Fed 
modellers and policymakers have got to measure the size and time of these demand and 
supply special effects, which they do base both on hypothesis and chronological knowledge.  
The financial system at the occasion was suffering from high joblessness, and with financial 
policy in force secure to its limits, with the financial system close to full service, they require 
for demand side incentive, while conceivably not completely gone, is surely much less than it 
was three or four years ago. Readily available is at rest a case for fiscal policy action 
nowadays, but to enlarge production with no excessively increasing inflation the centre has to 
be on getting better output and collective supply for instance, through better public 
communications that make our economy more well-organized or tax reform that endorse 
private capital investment. 
Ben S. Bernake, Jan -13
th
, 2017, “The Fed and the Fiscal Policy” 
https://www.brookings.edu/blog/ben-bernanke/2017/01/13/the-fed-and-fiscal-policy/ 
https://www.brookings.edu/blog/ben-bernanke/2017/01/13/the-fed-and-fiscal-policy/
Effects of Expansionary fiscal policy: 
Expansionary policies looking for speed up economic expansion, Expansionary policy 
is conventionally usage to try to fight unemployment in a downturn by lower interest rates in 
the expect that simple credit will attract business into increasing. This is completed by rising 
the money supply obtainable in the market. 
Expansionary policy attempts to encourage aggregate demand growth. So that 
collective demand is the amount of personal consumption, investment, administration 
expenditure and import. Monetary policy focuses on the primary two basics. By escalating 
the quantity of money in the economy, the central bank encourages private expenditure. 
growing the money supply also decrease the interest rate, which encourage lend and 
investment. The enlarge in expenditure and speculation lead to a higher collective demand. 
It is significant for policymakers to create believable announcement. If private agent 
(consumers and firms) consider that policymakers are dedicated to rising the economy, the 
agents will expect future price to be superior than they would be or else.

In an effort to move the economy out of a recession, the federal government would engage in expansionary economic policies. Respond to the following points in your paper on the actions the government...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment