Unit8 Macro-economic Policy
P吕晓磊art one: Text
Macro-economic policy refers to activities of governments that are designed to achieve full employment with price stability and equilibrium in the balance of payments. Generally, it includes (1) momentary and fiscal policies, (2) exchange-rate adjustments, (3) tariff and non-tariff trade barriers, (4) foreign-exchange controls and investments controls, and (5) export-promotion measures.
Since the 1930s, nations have actively pursued internal balance '(full employment without inflation) as a primary economic objective. Nations also consider external balance (balance-of-payments equilibrium) as an economic objective. A nation realizes overall balance when it attains internal balance and external balance.
A. Police Instrument
To attain the objectives of external balance and internal balance, policy makers enact expe
中国最冷的地方nditure-changing policies, expenditure-switching policies, and direct controls. Expenditure-changing policies alter the level of aggregate demand for goods and rvices, including-tho produced domestically and tho imported. They include fiscal policy, which refers to changes in government spending and taxes, and monetary policy, which refers to changes in the money supply by a nation's central bank (such as the Federal Rerve). Depending on the direction of change, expenditure-changing policies are either expenditure increasing or expenditure reducing.
Expenditure-switching, policies modify the direction of demand, shifting it between domestic output and imports. Under a system of fixed exchange rates, a trade-deficit nation could devalue its currency to increa the international competitiveness of its industries, thus diverting spending from foreign goods to domestic goods. To increa its competitiveness under a managed floating exchange-rate system, the nation could purcha other currencies with its currency, hereby causing the change value of its currency to depreciate. The success of the policies in promoting trade balance largely depends on switching demand in the proper direction and amount, as well as on the capa
city of the home economy to meet the additional deman有水平的证婚词d by supplying more goods.
Direct controls consist of government restrictions on the market economy, and may also be levied on capital flows so as to either restrain excessive capital outflows or stimulate capital inflows.
B. 微分学Monetary Policy and Fiscal Policy
Lt is known to all of us, the exchange-rate polices primarily affect the economy ' external ctor, while having condary effects on its' internal ctor. Let's now consider monetary police and fiscal police as stabilization tools. The tools are generally ud to stabilize the economy’s internal ctor. While having condary effects on its external ctor. How successful are monetary police and fiscal police in achieving full employment and price stability?
Let us assume that the mobility of international capital is high. This suggests that a small change in the relative interest rate across nations, induces a large international flow of ca
尚志一中pital (investment funds).This assumption is consistent with capital movements among many industrial nations, such as United States }and Germany, and the conclusions of many analysts that capital mobility is increasing as national financial markets have become internationalized.
Two conclusion will emerge from our discussion: Under a fixed exchange- rate system, fiscal police is successful in promoting internal balance, whereas monetary policeis unsuccessful; (2) under a floating rate system, monetary police is successful in Promoting internal balance, whereas fiscal police is unsuccessful.
C. Tariff and Non-tariff Trade Barriers
A tariff is a duty or fee levied on: goods and rvice being, imported into the country. The tariffs can be of two types: protective and revenue. Protective tariffs (import taxes) are designed to rai the, retail price of imported products so that domestic goods will be more competitive and. foreign business. Will be discouraged from shipping certain goods into the country. . The tariffs are meant to save jobs for domestic workers and to keep i
ndustries (especially infant industries) from bankruptcy becau of foreign西游后记 服字组词competition. A revenue tariff is designed to rai money for the 'government.
Today there is still considerable debate about the degree of protectionism a 酒店定位government should practice. Nevertheless, almost all countries practice a police of protective tariff and both import and export goods are subject to customs duties. Tariff (customs) duties are of three types: specific, ad valorem arid compound.
Non-tariff barriers are less visible, but they are extremely effective restrictions on trade. The principle categories of NTBs are quota, licen and new barriers.
D. What and How Are the Major Objectives of Macro- economic Policy?
The four major objectives are (1) furl employment, (2) price stability, (3) a high, but sustainable, rate of economic growth, and (4) keeping the Balance of Payments in
Equilibrium. We will look at the way in which the objectives are measured.
The first one is full employment or low employment. Tho courted must be out of work; physically able to work and 'looking for it, and actually claiming benefit.
