Grade 8B IGCSE
____________________________________________________Cambridge University____________________
- 5.1.2:Discuss the possible effectiveness of government policies on the four basic objectives.
Last date for Submission:
May 2nd, 2014
Please Write Your Response in 750 Words
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B. References. 5 Marks [Use Harvard referencing style]
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Government helps a lot to sustain the economic development of a country, their 4 main objective of being Government are such as first low and stable inflation second high and stable income third is high and sustainable economic growth and fourth is International trade and Bop if government could maintain this four objective the country will not have any more problems
ReplyDeleteFirst it’s a must for government to try to maintain a low and stable inflation because if inflation happens goods price will rises drastically and people can suffer a lot from rising of prices from inflation this is usually caused by too much production of money and so than the country money value get lower because of the money supply.
Second is unemployment income, this is also very important to a country because it can decrease aggregate demand, public expenditure and increases the country dependency ratio and could give troubles such as increase of crimes rate and many more because this people who are unemployed need money this is mostly caused by increased of uneducated people and more usage of technology than humans
Third is International trade and Balance of payment, Balance of payment means systematic record of all economic transactions between the residents of a foreign country" Thus balance of payments includes all visible and non-visible transactions of a country during a given period. It represents a summation of country's current demand and supply of the claims on foreign currencies and of foreign claims on its currency, international trade is exchange of goods with other countries basically about export and imports and this is important to increase our export and fewer imports so we will get surplus
Fourth is high and sustainable economic growth so government must maintain the country so its going to develop but not to high that’s why they must maintain them because excessive growth can create Goods and service inflation House price inflation, Wage inflation, Labor shortages, Falling savings, Excessive credit Trade difficulties can happens but also in negative growth Goods deflation, House price deflation, Labor surpluses , Unemployment, Excessive debt burden ,Public sector debt can happen so its best to keep it high but also stable
Government could handle these problems using policies such as monetary or fiscal policies this policy and other policies such as
ReplyDeleteFiscal policy is the use of government taxation an spending to influence the economy, or else it involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand so people will save more rather than spending and this also will increase country money so they can use it for the country growth opens schools with this money they are having , keep inflation from happening because the money peoples keep will also be given some percentage they have so it prevent the inflation to happen because annually government take some money so the money won’t pile up, give subsidy to the exports in the country so higher export rates and more people are interested in exports and they can also subsidized Indonesia products so less import will be make .last a growth in the country economics of that country because of the money and the development they are doing and the way to impose this is two by direct taxes such as the one we must pay monthly or indirect taxes such as sales tax , specific tax , value added tax or goods and service tax..
monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability the goals of monetary policy are stable prices and low unemployment and also the control of money supply so it’s not too much or too little preventing inflation or deflation because both are bad
So in my conclusion is that Government is very effective to handle the four main objectives of government such as low and stable inflation second high, stable income ,is high and sustainable economic growth , International trade and Bop because by doing Fiscal policy and monetary policy it can branches up to helps the problems such as fiscal policy by paying direct and indirect tax our country is developing, employment can increase and many more or Monetary policy that can prevent the inflation to happen by controlling money supply , decrease unemployment and stable price in the market and also for our country growth and many more.
Reference :
Cornell Notebook
Originality:
100%
First, there are four government objectives. The first objective is a low and stable inflation. The second objective is a high and stable employment. The third government objective is high and sustainable economic growth, and the fourth government objective is international trade and stable balance of payment. When inflation is high many people will be afraid that they must produce more money if they want to fulfill their family needs because the price of goods and service will be higher. This will also have an impact to the economic situation of the country. When inflation is high this will definitely affecting the people’s economic ability as they might be facing declining of buying ability. Hence, when he people buying ability has gone down, the general economic condition of the country will also badly affected. The situation will also get worse when the government has to produce more money to support and this will bring disaster to a country as the value of the money will fall drastically not only as it is in the usage inside the country but also in relation with other currencies. However, When inflation is low and stable many family can save their money for other needs because the price is cheaper. Moreover, the value of the money also will be stabile towards foreign currencies. If there is low inflation interest rate will also decrease so many people don’t get to high interest rate. If there are high and stable employment the standard of living increase because of better disposable income and it will increase economic growth. If there are more employment there will be more workers available for many business. If there are higher employment it can also increase GDP (gross domestic product) because the country will be more productive because there are more workers. High and stable economic growth can improve standard of living because capital income will increase. High and stable economic growth can reduce poverty because they will have higher income and lower unit cost. High and stable economic growth make the country get more income and get richer so they can buy and improve the country’s technology to become better and more modern so that it can produce more goods.
ReplyDelete. As the economic growth is stable and high, definitely the country will have a very stable situation as the people are economically well capable and also this will mean that they are not left behind in other aspects as well such as politics, welfare and every other parts. This is because a stable economic certainly will bring welfare of the people and hence, people will live in peace, satisfying and well condition and the ability to survive inside the country itself as well as globally. These factors will definitely brings up a good political condition and other aspects will also follow. A stable balance of payment can reduce cost and they can avoid debt because the country will get more profit and the country can spend the money on more important goods such as fixing the public property. There are two types of government policies fiscal policy and monetary policy. Monetary policy is controlled by central bank and the central bank will determine the size and growth of the money supply, that will affect interest rate. The bank will use interest rate and they can control the money by using interest rate they can increase or decrease borrowing. All these will also be affected by the rate of inflation that happen in a country. When the country money is cheap due to high inflation, the bank will make more borrowing and when the price is high they will decrease the borrowing because they can increase the interest rate when the country money is cheap. Fiscal policy is controlled by the government that will set the maximum price or the wage of the people in that country. Example of this is tax government use tax to control the amount of wage that a person have. The government will use the tax for making public goods. The government will take higher tax for the goods that are high class or expensive. But some people don’t like to pay tax because their profit will decrease and some of them don’t pay tax. If a company or a person caught don’t pay tax they will be considered as corruptor and they can go to jail or the government can ask them to pay higher amount of money in the form of fine to cover the tax that they don’t pay.
ReplyDeleteReferences:
• http://www.diffen.com/difference/Fiscal_Policy_vs_Monetary_Policy
• http://tanzaniataxationportal.blogspot.com/2012/09/advantage-and-disadvantage-of-taxation.html
• http://wiki.answers.com/Q/What_are_the_advantages_and_disadvantages_of_high_employment?#slide=6
• http://www.bankofcanada.ca/wp-content/uploads/2010/11/benefits_low_inflation.pdf
• http://tutor2u.net/economics/revision-notes/a2-macro-economic-growth-costs-benefits.html
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Vincent cia 8B
As you know government policies is a declaration of government political plans, activities and intentions relating to the concrete causes, etc. government policies can affect on some party and people. Of course the government policies is make so that everything can run well and the economics of the country would also be good.
ReplyDeleteGovernment has four basic objectives, first is low and stable inflations, second, high and stable employment, third is high and sustainable economic growth, and fourth is stable BOP (balance of payment). Governments also have some other policies like inequality and sustainable development but the basic four is the first one. Government policies have some advantages and disadvantages on some part or people let’s discuss about it.
First is low and stable inflation. Well as you know inflation is a general increase in prices and the fall in the value of money. Who wants high inflation that means the goods and the things have a high prices and the value of money keep decreasing? Of course no body wants to have a high inflation, so that government makes a policy to keep the inflation low and stable. Well if there is a high inflation means there is increase in the aggregate demand. To control the inflation, the government increases the taxes to the high incomers, while decreasing the taxes to the low incomes and the low level of people. if the high incomers pay high taxes means the taxes will go to the government and the public revenue will increase. By doing that the taxes also can be use to increase subsidies to lower level of people, can make good quality or roads and other public good, and also they can use it for merit goods such as for education to the one that don’t have education yet.
Second is high and stable employment. Unemployment is not good because there is many load dependence. Example in a family there are 3 members, 1 of them work as an employee and 2 others is unemployment. If only one member that work for 3 members they will have many load dependence. Unlike if they have 2 members work as an employee and 1 as an unemployment they still have a little load dependence. To control unemployment, government gives subsidies to the lowered level of people so that their children can study and can have a good work later and a will have a good future.
Third is high and sustainable economic growth. Economic growth is the increase in the market value of the goods and services produces by economy overtime. It is conventionally measure as the percent rate of increase in GDP. By the present of the economic growth there is an improvement in living standards, growth is important through which per capital incomes can rise and the poverty can be reduces in developing country. Second it also make greater business confidence, growth has a positive impact on profits and business confidence, because if they have an economic growth means they have a good economy in their country so all business confidence will rise. The fiscal dividend, a growing economy can boost tax revenues and generates money to finance on public goods and merit good and services without raising tax.
ReplyDeleteFourth is balance of payment, means there must be a balance between the export and the import. The developing country such as America, United Kingdom, etc they have more export than import which good, means if they have more export than import means that they have more income than outcomes. While the LEDC (less economic developing country) such as Indonesia, Malaysia, etc they have more import than export which is bad. If they have more import than export means they have more outcomes than the incomes.
It has several disadvantages if government doesn’t give the policies. First if there is no low and stable inflation, many people will become poverty and soon the economics of the country will decrease and become lower. Second, if there is no high and stable employment there will be many crime, poverty, many of them will corrupt, steal from the bank to fulfill their needs like foods, clothes and shelter. They also can make visual pollution and even water pollution because usually they built their house near the river so they wash their clothes there, etc. third is the high and sustainable economic growth, if there is no economic growth many business confidence will decrease because they will think that they have less economics in their country and they think they will lose in the competition. Fourth is stable BOP, if they have more import than export means they will have more outcomes and incomes and it means their economics will be less.
So the conclusion is the government policies with their objective can influence people and some parties with good ways, like example it help to reduce inflation, high employment so that they can have a good economics in the country, high economic growth and stable BOP.
References:
- Notebook
- Textbook
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-Shelvina Gabriela 8B-
Government policies will have a lot of effect on their four basic objectives. There are 2 type of government policies which are fiscal policy and monetary policy. Fiscal policy will consist of public expenditure , public revenue and borrowing . Public revenue is the money that the government got. Usually they got the money from taxes and fees. There are two type of taxes which are direct taxes and indirect taxes . Public expenditure is government spend money to provide the facility for their people. Borrowing can be from domestic or international. Monetary policy is the one that’s done by the central bank .
ReplyDeleteSo government policies will of course effect the four basic government objectives which are first , low and stable inflation , second , high and stable employment , third , high and sustainable economic growth ,and fourth , stable balance of payment. . This will of course brings some advantages because this policy , can help the government in solving their problem. Government policies can help and affect the four objectives , because First , Government policies can help to stabilize and keep the inflation stable. Inflation is condition when the price rise because people are getting more money and they spend more . This will cause a fall in the value of money. That’s why the government must keep the inflation stable. Because if not , poor people can get a lot of disadvantages . The price is increasing but they don’t produce any money . They can get more suffer .This government policies can effect this because they can set the taxes higher. Taxes will be given to the people that have a high income so that their money can be decreasing . If their money decreasing , they can spend less and keep the inflation stable. The example problem is in Pakistan . Its said that Pakistan is having an increase of 9.2 percent in April , according to PBS . What they can do is to charge a higher taxes for the rich people so that they can spend less. Second , is that the government policy( fiscal policy) can maintain a high and stable employment. They can use the money from taxes or fees to build some new free schools. They can have some public expenditure. They can make all of the people in the country have a standard skills so that a company want to employ them. Open a new schools will also need some new employee. So , all of this can reduce the unemployment. The example will be like Japan. Japan government have a really good control of their country that make their rate of unemployment is only 3.6%. They build a lot of free schools for their people. Its said that the japan unemployment rate remain constant at 3.6%. This means most of people in Japan are employed. Third , gov’t policy (fiscal policy )can help to sustain the economic growth of a country. In here , the government can reduce their public revenue by charging lower taxes. Lower taxes can make people want to buy more . if there are more people that want to buy more , this will cause the production of the country increase and make a high economic growth . Fourth is that the government policy can help to stabilize the balance of payment (BoP). They can charge low taxes so that people want to buy more and this can cause higher production of the country. This country production can be exported and make the gov’t gain more money. The government can also reduce their expenditure. They can less their imports so that at last , their exports will be bigger than imports and create a positive BoP . the example will be like in China. Its said that China have a surplus of 7.2 billion US dollar. This is because china Is having more exports and imports. In recent years there are many products that’s made in China . China have a lot of population that cause them can have a lot of production that will be exported . This make them government it self gain a lot of revenue.
But sometimes government policy can also give no effect on the objectives. They can even sometimes create some bad effect . the examples of the bad effect are first government policy can charge higher taxes and make people’ money decreasing. Government do this to keep the inflation stable. For the government this is an advantages but for the people it self it’s a disadvantages. Their money is decreasing . They can buy some goods that they want. Their money will just be enough to buy their basic materials. Second is that , sometimes government charge the taxes to all of the people . If the poor people that get a charge of taxes , the poor can get more suffer. They cant even buy food , if the taxes is being charged , then they cant buy anything. Third , is that sometimes after the government charge taxes , they use the money for their self . They do corruption like in Indonesia. The money that they got is not being used to build the country but they used it to buy their own goods and services. Many people will got the disadvantages.
ReplyDeleteSo in conclusion , even though government policy can give some bad effect , they are giving more good effect. This government policy really help the government in reaching their objectives. Without this , government may be hard to solve their problem. They are helping the government in solving some problems like inflation , unemployment , BoP , etc.
References :
- Notebook
- Textbook
- www.dawn.com/news/1103830/inflation-surges-in-april
- www.rttnews.com/2313309/japan-unemployment-rate-steady-at-3-6.aspx?type=alleco&utm_campaign=sitemap
- www.shanghaidaily.com/article/article_xinhua.aspx?id=214802
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kezia-8b
A government has 4 major objectives, the first objective is “Low and Stable inflation rate”, second would be “High and stable Employment rate”, third “High and Sustainable Economic Growth”, and last would be “A Stable Balance of Payment and Regulations in International Trade, Involving Exports and Imports”. In achieving these goals a government must make and set policies. A policy is a rule, made by the government to achieve their objectives. There are two major types of government policies, first is “Fiscal policy” the other is called a “Monetary policy”. Then main difference between each other is that Monetary involves changes in functions of the Central bank of a certain country which usually means interest rates or debt services, while Fiscal involves changing taxing services, public revenue, and public expenditure. The policies are made for the government to achieve all of their objectives.
ReplyDeleteSo the effectiveness of these policies varies. Not every single one works as well as the other.
Taxes are a fiscal policy. And they helped the government on receiving capital, which can be used on to fund other things. They helped on one of the objectives that the government has which is “High and sustainable Economic Growth” which is very crucial for a country especially the ones that has not fully developed yet. How? By providing funds to the government they can use it to fund public expenditure activities. Public expenditure involves aspects such as investment, developing infrastructure, purchasing merit goods, purchasing public goods, and capital expenditure. By providing taxation policies, the government can achieve their objectives indirectly. And this has proven very effective in most countries. As the people today, generally pays taxes. There are penalties of not paying taxes these penalties range from light to as heavy as jail or having private property such as cars, houses, boats, and other properties being seized. So taxes are a good example of policies implemented well in a country.
Fees are also a major part of fiscal policies. The government gives fees, these are usually given to regulate the demand of a specific product. As an increase price will decrease a certain product’s demand. This will can regulate the country’s BOP (Balance of payment), decreasing it to a degree. Balance of Payment is the total transactions of the country with other countries, which means transactions that involves Importing goods or Exporting goods. And one of the objectives of a government is to have a stable BOP (Balance of payment). When implemented well it can help ensure a stable Balance of Payment in a certain country. They are implemented well because an unstable balance of payment can lead to a country in deficit mode. In which exported goods are much less than that of imported goods (Imported goods>Exported goods). This can cause a huge debt, which is why the government is eager to implement it so well.
Some policies affect the country in a bad way.
ReplyDeleteIn one case that happened in Chicago, United States of America. Oil has been lacking. This was caused by the government, they did not allow extra oil refineries to be built around the area of Chicago. Prices of oil jumped, as the rarity increases. This is the opposite of the government’s objective which is “Low and stable inflation”, because prices inflated greatly. This is a case of government policy being implemented poorly. Affecting the country in a very bad way. The government should have just given the area of Chicago more oil refineries, and even better invest in them. An investment by a government means receiving a subsidy. As the government does not take money back.
Now from time to time these policies have done well for the government, because it helps them greatly on their objectives. When they are implemented in the country greatly, they can help the government by a significant leap. When not implemented right they barely do anything at all. Which is why good implementation of these policies, are every important.
So the effectiveness of government policies varies, but it is generally depends on one single thing, and that is the level of implementation of that specific policy. A bad implementation of a government policy will lead to a useless policy.
To conclude what i have discussed in this essay, is that different types of policies will have different level of effectiveness. But a low level of implementation of the policy can lead to lack of usefulness in the policy. The opposite can be said for a high level of implementation of the policies.
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References:
http://www.brookings.edu/~/media/research/files/papers/2010/2/implementation%20analysis%20weaver/02_implementation_analysis_weaver
http://www.cato.org/publications/commentary/bad-government-policies-fuel-gas-prices
https://answers.yahoo.com/question/index?qid=20100401204257AAlOXUG
http://www.investopedia.com/terms/b/bop.asp
There are two types of government policies which are fiscal policy and monetary policy. Fiscal policy is the use of government revenue collection and expenditure to influence the economy, or elese it involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand and the level of economic activity. Fiscal policy consist of public revenue which are taxes ( direct taxes and indirect taxes ), fees, profit, and disinvestment. Fiscal policy also consist of public expenditure ( capital expenditure, new investment, developing infrastructure, current expenditure, public goods, merit goods, and defense ) and borrowings or debt services. Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
ReplyDeleteGovernment policies will affect the four basic objective of a government. The first one is low and stable inflation. Inflation is sustained increase in the general price level of goods and services in an economy over a period of time. The problem of inflation is price rise; fall in value of money, decreasing of disposable income, and the decreasing of purchasing power. The second of four basic objective of a government is high and stable employment. The third is high and sustainable economic growth. Economic growth is the increase in the market value of the goods and services produced by an economy over time. And the last one is stable BoP ( Balance of Payment ) and regulating international trade. International trade is good and services with rest of the world.
Their impact on business activity :
• Gross Domestic Product
The total market value of goods and services produced in a country. Calculated in real terms to adjust the affects of inflation.
• Increasing Economic Growth
The advantages of increasing economic growth is increasing sales and revenue, expansion competition leading to efficiency, future planning encourage borrowing to expand business for firm and increase the spending on consumers goods, bright prospects in business activity. There are also disadvantages of increasing economic growth. They are; creating demand pull and cost push inflation, risk for future incomes employee especially for fixed income employee, employer conflicts with trade union due to wage rises.
• Inflation
CPI in previous year x 100 inflation rate. Inflation is a persistent increase in the average price level where the value of money is falling. CPI is used in calculating inflation. Types of inflation; Demand Pull Inflation : Excess demand for products causing shortages of products “too much money chasing too few goods!” Second, Cost Push Inflation : Inward Supply Shifts caused by high input costs high price of oil CPI in current year.
• High rate of inflation
Benefits debt value falls value of fixed value or fixes assets rise. If bought earlier so debtors feel rich in real, stocks provide an increased margin from the effect of inflation. Disadvantages of high rate of inflation are high wage demand from trade unions, price sensitive consumers ( purchasing power parity falls ), interest rates increase, risky if business is highly geared, cash flow problems, and future uncertainly reduce investment planning.
• Unemployment
ReplyDeleteThe number of people from 16 until 60 years old who are economically active, willing and able to work, but cannot find a suitable job. The rate of unemployment is an indicator of the health of an economy as it shows how well this scarce resource is being utilized. The formula is unemployed labour force divided total labour force.
• High rate of unemployment
The disadvantages of high rate of unemployment are loss of sales revenue, redundancies, social issues, tax increase, stock control and production problems, and growth falls. And the advantages of high rate of unemployment are create variety of labour skills available, create relocation of resources may lead to more efficiency, and provide big pool of cheap labour.
• Stable exchange rate
The price of one country’s currency in terms of another. It is determined by the market forces in a free market.
• Exchange rate appreciation
The disadvantages of exchange rate appreciation are exports get expensive result uncompetitiveness, local small business unable to survive. The advantages are raw material importers will gain caused cheap price resulted lower average cost, more competitiveness and efficiency, and foreign skilled labour will immigrate to domestic country can create transfer of technology.
• Exchange rate depreciation
The disadvantage are imported inflation if lack of resources, difficulty finding reliant supplier, unstable prices affects exports, and future pricing policy uncertain. And the advantages are demand increase at domestic and international level, and expansion plans reduced competition.
The conclusion is every macroeconomy policy has consequences due to targeted goals. However government has to account every consequences will be experienced by society. Consequences mean external cost and external benefit and future benefit and future cost. At the end social benefits should be bigger than social cost that will result society better off.
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Reference :
- notebook
Government, like most people will have its own objectives for the country, this is because government wanted to make its country as best and greatest as possible. By doing this, government will have 4 main objectives, which are: low and stable inflation, high and sustainable economic growth, high and stable employment, and also international trade of BOP. Most government will of course have more than 4 types of objectives such as inequality and sustainable development, but these are the most mainly problems encountered by a government.
ReplyDeleteTo discuss in depth, a low and stable inflation is very important in a country. Inflation is a general increase in price and a fall of value money. If inflation is very high in the country, it can cause the value of the nation’s currency decreasing and the prices of goods increasing. This can cause the country to have a poor economic growth. To prevent this, government can use the policies to stabilize the inflation. They can increase taxes on luxury goods so less people will be able to buy such goods. Why luxury goods? This is because only most of the upper class level spends a lot of money in luxury goods, since the value of money is falling, they can spend cheaper prices on luxury goods. If government decided to also increase taxes for the middle and lower class levels, they wouldn’t be able to buy basic goods and needs for their daily survival. By increasing taxes on several goods, more people wouldn’t be interested on buying such goods and therefore, the rate of money will increase and the prices for goods and services will decrease.
A high and sustainable economic growth is also important for the country to prevent high level of unemployment, to increase revenue and income, and also to decrease the rate of poverty. An economic growth is the increase of goods and services produced per firms and country in a period of time. A good economic growth is determined when the total output in this year is greater than the total output in this year. Government can use the revenue of taxes that the people imposed to them and can help business and companies by funding them with capitals and others. This can help the business to boost their confidence and have more finance to increase its quality and innovations, which later can also boost up the amount of output produced. By doing this, the business can have no problem on paying taxes to the government, and government can receive more taxes without having to increase the taxes needed to pay.
A high and stable employment means that the more people can work, which means the level of poverty in the country can decrease. This problem can be solving by the help of the government. They can open new work fields and offer jobs as an employee in the government, or serve in the navy and marines if they are allegeable. Government also can give subsidies to the ones that aren’t as able as the rest. If there are high amount of unemployment in the nation, there will be more dependent rate needed to be handled, not just for the family, but also to the government, government needed more funds to give free education and medication to the people who didn’t employ as a worker, and so all the finance of the government will be lost only because handling the unemployed people.
The international trade of BOP (balance of payment) can help determine if the country is moving forward or depending on other country’s productions. A BOP is defined as a system that keeps track of all the country’s economic transactions with other parts of the country. A good kind of BOP is when the nation’s export is more than the nation’s import. An example of this is the country America, they have balanced international trade of BOP because they have more exports to other countries, and goods such as their metals, apple Inc., and medical equipment are all used in most parts of the world. Having a balanced of payment is very important in the country, if a nation is too dependent to other’s production, this can endangered the country when the other nation is having a crisis or recession, therefore prices of the goods will increase an the production might decrease. So the country wouldn’t be able to achieve their daily needs. If they have more exports than import, this means that they have more income rather than spending them, because more country bought goods from them.
ReplyDeleteSeveral problems might occur if government is using their policies for the 4 basic objectives. Example, sometimes government might increase taxes for every gods and services available in the country, this can be made if the inflation is already worsen, or when the government needed more fund. Because of this lower and middle classes wouldn’t be able to purchase their needs for their daily life because the cost is beyond what they can pay. This can lead the country to higher level of poverty, and may lower the economic growth of the country. Other than that, there are examples of the government using policies that affects a country in a bad way, which is the decline in British industry. According to a new report from the think tank Civitas, this means that the government's hope that it can start a private sector revival by reducing public sector spending, easing regulation misplaced, and cutting tax. The coalition is "solving the wrong problems", Cvitas said, and it needs to take an urgent steps to address the productivity and capacity in British industry, which has been "hollowed out" over the past 30 years. The long-term trend in the country has been towards deindustrialization, despite a small number of high profile investments in the automotive industry in recent months. Manufacturing now makes up 11% of the UK's gross domestic product (GDP), against 20% in 1997. This shows that former industrial towns are experiencing high and persistent youth unemployment.
To conclude my essay, even though there are several disadvantages in applying those policies, we can see that the government policy has great benefit to the government’s objectives. They all have proved that the policies may help achieving its goals and make its nation’s economy better and stronger.
References:
Notebook
http://www.huffingtonpost.co.uk/2011/11/13/government-economic-polic_n_1090854.html
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ReplyDeleteGovernment policy has 4 objectives, that they believe will help the country to develop to a better. 1.) Full employment 2.) Price stability 3.) High and sustainable economic growth 4.) Keeping Balance of Payment in equilibrium.
1.) Full employment or known as low unemployment
Full employment was one of the most important objective of the government. Supply of labour are a lot, but demand is less. This leads to low number of employment people. Many will be unemployeed which leads to poverty. Poverty means the fall in the income of people and which will reduce the standard of living. This will read to a fall in the economy of the country. And if it happens, government will have a very hard time to solve this problem. They will have to ensure people are employeed to help rise the economy of the country.
2.) Price stability which means low inflation.
Price stability refers to the growth and low inflation. Inflation itself is a situation when all goods and services are very high and when value of money falls. Factors could be because import is bigger than export of the country, or because a large amount of people is now able to buy more goods and services. In other words, infation that happens in a country, leads to a bigger gap between the poor and the rich. It’s obvious that this brings disadvantages for the country, because the economy of the country might drop, because not all is able to buy and which will lead to poverty. This is why government have the goal to keep inflation low and increase the export of the country to enlarge the income of the country itself.
3.) High but sustainable economic growth
Economic growth is measured in terms of change of real GDP (Gross Domestic Product). If the economic growth of the country is high, it means the country will benefit, it also means that the income of the country rise.
4.) Keep Balance of Payment in equilibrium
To keep balance of payment in equilibrium, the earning of the export of the country’s goods and services have to be enough to pay for it’s export. If it’s not the case, the account will be in deficit. This leads to losses for the country.
There are also policies that government made to help support these 4 objectives. There are 2 policies : fiscal policy and monetary policy. These policies are the ones helping the government achieve their objectives. Fiscal policy’s main objective is to increase the aggregate output of the economy, while monetary plicy’s main objective is to control the interest and inflation rates. Fiscal policy gives impact on the goods market, while monetary policy give impact on the asset markets.
ReplyDeleteFiscal policy itself is the use of government’s taxation and expenditure to influence the economy, it involves government changing the taxation and government spending loverls in order to influence the aggregate demand and also the level of economic activity. Example : a country’s economy is experiencing recession, government might lower taxes. If people are paying less tax, then they have more money to be spend and to invest. The increase in the consumer’s spending or inverstment would obviously impove the economic growth. But too much spending could also cause inflation. Another way how government does to achieve their objectives in fiscal policy is by increasing their own spending. Like for example, by building more building and more highways, in other word, spending money for public expenditure.
About monetary policy, it is the porcess in which the monetary authority of a country controls the supply of money, it often targeted a rate of interest for the purpose of promoting economic growth and stability. Monetary policy refers to an expansionary policy increases the money in the economy more rapidly than usual, and contractionary policy will expand the money supply more slowly than the usual.
Advantages :
Using fiscal policy can significantly impact the national income, and will have immediate effect on the economy. Also, taxes on negative externalities will decrease the consumption of negative externalities. It’s similar to subsidizing merit goods and public goods, it’ll increase the consumption. Also, the tax cuts on wages will encourgae people to work, and different rate of taxes on the different levels of income reduces the gap between the rich and the poor. While for monetary policy, it promotes the maximum sustainable levels of economic output and create a stable price system, stable price means keeping inflation low. In flation itselfs reduces the purchasing power of money, and harms the economic growth. But as they maintain to keep inflation low, the economy of the country will just be fine.
Disadvantages :
Fiscal policy has it’s own disadvantages, is that it’s inflexible. Change in the direct taxes and government spending may take time because of some factors, like taxing rich people more than the poor may be unfair for them. Fiscal policy can rise more problems when soling the other, like for exambple, stimulating aggregate demand which goal is to decrease the demeand deficient unemployment may worsen inflation, due to it’s right shift in the aggregate demand, cause rise in price level. While for monetary policy, it’s problem is it takes time to work through the economy. Unlike fiscal policy, it takes a very long time to happen and may take even longer time to affect inflation.
So, in conclusion both fiscal and monetary policies both help government to achieve their goals or objectives which is to make a rise in the economy of the country and maintain it’s stable economic growth. But of course, both have their own disadvantages and side effects, so both are the same, they have good goals and both have their own weak point.
References : Notebook, http://www.investopedia.com/terms/f/fiscalpolicy.asp , http://en.wikipedia.org/wiki/Monetary_policy , http://www.ehow.com/info_8239910_advantages-disadvantages-monetary-policy.html , textbook
Regina Tanugrah 8b
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Each country will each encounter their own obstacles whether it is inflation, or an economic recession, there must be at least one time where they had their downfall. To prevent or to solve these problems, the government has 4 basic objectives. They would like to maintain a low and stable inflation, a high and stable employment, a high and sustainable growth and a stable balance of payment and regulating international trade. In order to do this, the government is given policy instruments in which they are able to utilize to help them achieve their goals easier.
ReplyDeletePolicy instruments include fiscal policy and monetary policy. The fiscal policy consists of the public revenue; also known as the government’s earnings, public expenditure and borrowing or debt services. The public revenue comes from various sources whether it’s from the taxes being paid by the citizens or by the fees the government receives from public facilities they provided. It may also come from the profit that is earned by the PSE (public sector enterprises) where then the majority of their money is handed in to the government. Or it may also come from disinvestment that occurs within the country, such as privatization, penalty (the money someone pays when they were caught doing acts of crime), or smuggling (when people are caught smuggling prohibited goods, animal or even people into the country). Public expenditure are the expenses of the country which comprises of the capital expenditure, new investments in the country, developing infrastructure, the daily expenses (the firemen, the weapons supply for the country, etc), the public goods (lighthouses, protection (army, navy, air force)(policemen, firemen, etc)), and also merit goods (health services, education, public libraries, etc).
So basically fiscal policy is the government policy that deals with the budget of the country such as tax and loans whereas monetary policy are the actions of the central bank working alongside the government to help them achieve their target. They help the government maintain the economy by influencing the money supply of the country. They are able to increase and decrease the interest rate of the country depending on the market situation. Bottom line, both policies are used to stabilize the economy when it is either overheated and vice versa.
The first objective that was stated was that the government wishes to maintain a low and stable inflation. Inflation is the general increase in prices for goods and services. In order to maintain a low and stable inflation they must analyze the current situation in the market. If the market is overheating, as in high inflation and high in aggregate demand, the government should increase the interest rates discouraging them to spend more but leaning more to saving, thus leading to a low inflation. Another way to reduce inflation is to increase the direct taxes hence resulting a fall in income, concomitantly increasing the government revenue. These money can then be used for developing the country even more by constructing even more developed infrastructure and also providing more merit and public goods to reduce poverty in the country.
Another way to reduce poverty will be another government objective that is to develop an unfaltering, yet high employment in the country. The cause of unemployment is that there aren’t any job vacancy available for skilled workers who are, or there aren’t any skilled workers yet plenty of job vacancies. So the government’s role when the country encounters this problem is to utilize its policy instruments to help increase employment in the country. For example, the government may increase its expenditure on merit goods to training people or giving out free education (university) so that they can produce skilled workers. Or they may also provide a space for the people to sell their goods and service.
ReplyDeleteTo develop a country, the government must first maintain a high and sustainable economic growth. This can be very advantageous for the country since it reduces unemployment and also provides a better standard of living for the people in the country. In order to achieve this particular goal the government would increase tax and interest rates to encourage saving rather than spending which allows businesses to invest more in capital goods and to expand even further. If resources are invested into building an economy now, in the future we will enjoy a higher level of economic growth; our businesses will produce more goods and consumers can purchase more goods. What gives us the chance to enjoy better standards of living would be the expansion of output at rates since it is faster than our population growth.
The last government objective would be to maintain a stable international trade of balance of payments. The balance of payments (BOP) is the procedure in which the country keeps track of all the transactions that occurred within the country. A balance of payment is when the export and the import of a country are even thus the country’s expense and revenue is equal. The government’s goal is to increase export (revenue) and maintain it higher than the expense. By increasing the tax on import goods the people will then be giving extra money into the government’s revenue and they are also encouraged to purchase local, domestic goods rather than import goods. This will lead to the decrease of import goods and result in a higher export than import.
As you can see, policy instruments act as an advantage towards the government and the country, it may also be the cause of their downfall. For example; if the situation is when the economy is overheating thus the government are increasing the interest rates. This will lead to a high inflation, which will lead to high prices in the market. Another disadvantage of policy instruments is if we have scarcity on natural resources (fuel, etc), which may lead to higher prices due to higher tax. This will then result into a higher cost of living, which will increase all the prices including wages. Because of that most companies will cut the amount of employees thus they wont need to pay more wages. As people lose jobs the country will have an increase in unemployment, which will then lead to poverty.
In conclusion, I think that policy instruments will be advantageous to help the government achieve their objectives but they may also be deleterious towards the economy and the country itself.
Charlene 8B
Reference:
• Notebook
• http://tutor2u.net/economics/revision-notes/a2-macro-fiscal-policy.html
• http://tutor2u.net/economics/revision-notes/a2-macro-monetary-policy.html
• http://www.tutor2u.net/economics/content/topics/macroeconomy/government_policy.htm
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There are four different kinds of government’s objectives. To make inflation stable, to make employment, have sustainable economic growth and stable stable balance of payment and international trades. And those objectives would be accomplished by using policies instruments. There are two policies instruments, fiscal policies which controls public revenue, expenditure and borrowings and monetary policies which controls national currency state, interest rates, bank rates, and other things that related with national assets.
ReplyDeleteThese policies will be very useful for government to reach their objectives. For example in a country with a prosperity condition which its aggrigate demand is greater than its aggrigate supply, government may use one of fiscal policies function, by increasing tax on goods, so that the aggrigate demand would be lesser which may re-stabilize the high inflation. Same manner to a situation where a country is having recession situation which its aggrigate demand is much lesser than its aggrigate supply, government may reduce the tax so that more people will be able to buy the products which may increase the aggrigate demand and re-stabilize the low inflation. Another example is by increasing taxes, government may use the money to give firms subsidies in order for them to expand so that they may create expansion of workplace which reduce unemployment rate. Another effectiveness that could be expressed is by reducing taxes which will increase aggrigate demand, productions created by firms may also increase because the production cost decreases so that the national economic growth could be increased but when the economic growth increased too much, government may increase the tax which may reduce demand and productions which may reduce the national economic growth and make it re-stabilize. Another example is government may make national income increases and decrease national expenditure which may create positive balance of payment by reducing taxes for domestic sales goods and increase taxes much for imported sales goods.
Above examples are direct affection of policies instruments for achieving government’s objectives. But there are also indirect affection of policies instruments for achieving government’s objectives. For example, by increasing tax, government may use the money to build more free public goods and infrastructure, provide free and higher quality education, do research and development which may make the country to be smarter and more highly educated which may reduce unemployment rates. After unemployment rates are reduced, criminals possibilities will also be decreased. When people are more educated, they will create and innovate domestic goods with high quality features which may increase the frequencies of exports and reduce imports for international goods which will improve national balance of payment indirectly.
However, in some cases, policies instruments are not needed in order for government to achieve their four basic objectives. The roleplay of taxing systems would not be needed in order for government to achieve their four basic objectives. For example if government wants to reduce excessed aggrigate demand, they can use other ways other than increasing tax such as make rules to make the number of goods should be produced per year to be more. Or if too much aggrigate supply, government may add rules to limit the number of goods allowed to be produced per year. Another example is to increase employment rates, other than using those policies, government could use other ways available which is by reducing national population growth (add up one child or two child policy), attracting new investors to invest money by opening new business and creating new workplace for people to work. Lastly, government may provide free and higher quality education which may make the country to be smarter and more highly educated which may reduce unemployment rates. After unemployment rates are reduced, criminals possibilities will also be decreased. When people are more educated, they will create and innovate domestic goods with high quality features which may increase the frequencies of exports and reduce imports for international goods which will improve national balance of payment.
ReplyDeleteEvery policies instrument need to be maintained by turns. Government should not focus on only one policy instrument such as only focus on to make inflation to be stable. Because once government is only focusing on one policy instrument such as only focus on to make high inflation to be stable (by increasing tax), the economic growth may turned to be decreasing, why, because if the tax is increased too much, productions may fallen much because demand also fallen much which makes the total output of the current year to be much lesser than the total output of last year.
So, even though there are some cases which enable government to achieve its four basic objectives without using policies instruments, but it is muchly better if government use policies instruments to achieve its objectives because it makes government easier to do their job. But as it said before that every policies instruments need to be maintained by turns because to make all to be stable and to make aggrigate demand which is household consumption + firms’ investment + government expenditure + (x-m) to be equaled to aggrigate supply.
Reference:
ReplyDelete• Notebook
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The government plays an important role in country; it acts as a system that governs the state or area. It is common for problems to occur in a country, problems that may result in even bigger ones and this is the government’s duty to take initiative to try an solve those problems. This has becomes their objective, they have 4 main and basic ones, which are low and stable inflation, high and stable employment, high and sustainable economics growth and stable balance of payment. Measures that could be taken are by implementing policies, policies rules of protocols that are set as guidelines and must be followed. There are two types of policy, first, the fiscal policy and the second one, the monetary policy. The fiscal policy consists of public revenue, public expenditure and borrowing or debt service, this policy usually involve taxations and spending to influence the economy. While monetary policy is mostly controlled by the central bank where they control the interest rate to promote the economic growth and stability, resulting in more stable prices and higher employment.
ReplyDeleteInflation is a common problem in most countries, this is a situation wherein the prices are high but the value of money goes down but people with high income would still have demands for goods in the market, which means high demand. Continuous inflation may cause inflation, and in order to avoid that, the policies could be at use. On the fiscal policy side, taxes, which is compulsory for every citizen to pay, could increased, this can result for people with higher income be force to pay higher taxes and save more to prevent deficit of money. The taxes collected would later then be taken by the government, this results in an increase in public revenue, used as subsided to help improve facilities like the roads and merit goods. Unemployment is a situation where there are wiling workers but unable to find a job at an existing wage rate. With taxes imposed, public revenues increases, subsidies could be given to the firm to expand which will need more employees, this would help in decreasing the unemployment rate.
To help the economic growth of a the country, direct taxes, a part of public revenue, could be decreases so that people would buy more and demand increases, with the increase of demand, supplies should be increased as well, production would be more active and this increases the productivity of a country. To help the balance of payment of a country, which is tends to be deficit, taxes could be imposed to the import, which means people would buy less from the outside and lessens the country’s expenditure and decrease the taxes of exported goods, which means the people outside would be attracted to buy more from the country, increasing the country’s income.
ReplyDeleteHowever, as advantageous the policies might sound, like everything else, they would still have their cons. In fiscal policy, taxes are involved a lot, and if the taxes are increased to much, it might cause more trouble for those unable to pay high taxes, moving the country towards a higher level of poverty then before, especially to those countries who has a worse case of inflation, with its decreased of money value, those in the lower-middle class would have a harder time to buy basic items for the daily life. In monetary side, their goals could clash against each other, yes, increasing the interest would help in taming out the inflation rate but it could also ignite a spark in further increasing the inflation if the monetary policy remains expansionary.
In order to conclude on what have been discussed above, government policies do affect the economy in a country, however how effective is it towards the four basic objective is unsure, as like everything these policies have its pros and cons, however what is sure is that if these policies are well implemented, it would work opposite to badly implemented policies, those efforts would just be futile.
Reference:
http://www.tutor2u.net/economics/content/topics/macroeconomy/government_policy.htm
http://en.wikipedia.org/wiki/Fiscal_policy
http://en.wikipedia.org/wiki/Monetary_policy
Notebook
Originality: 98%
There are four basic objectives of a government . The first objectives of a government is to have a low and stable inflation rate which means , as a government we have to make inflation rate stable. Lower the inflation rate , it will be better for a country. Inflation means when increase in a price of a products. The second objectives of a government is to have high and stable employment rate , in this case , it would mean that in a country it should be having a stable rate of employment. How to have a stable rate of employment? To have a stable rate of employment, we have to increase the number of jobs available which will automatically reduced the number of unemployment. That is the way how to reduce unemployment. The third objectives of a government is to have high and sustainable economic growth which means that government need to have a high and sustainable economic growth. The fourth is a stable balance of payment and regulations in international trade. This means a government must have a stable balance of payment (BoP) and controlling the Import and export. In some cases, Export should be greater than Import, but in Indonesia the total number of Import is less than the total number of Export, this makes some country borrowed money to fix this conflicts. There are two types of government policies =
ReplyDelete1. Fiscal Policy = is using government's public revenue and expenditure to influence the economy, or else it changes the levels of taxation and government spending in order to influence AD (usually we called it as Aggregate Demand) and the level of economic activity.
2. Monetary Policy = is the process when monetary authority of a country controls the money supply, often aimed to a rate of interest for the purpose of promoting economic growth and stability .
The main difference of both policy are monetary policy usually involves central bank and fiscal policy involves public revenue, public expenditure, taxes.
There are two types of taxes =
1. Direct taxes = is a type of tax that we paid money directly to the government
2. Indirect taxes = is a type of tax that we paid money to government indirectly, for example we paid to the restaurant and later on the restaurant will be paying to the government. That is meant by indirect taxes.
There are some advantages and disadvantages to have a high number of employment =
The disadvantage is high number of employment will upset the country's balance of payment (BoP). The advantages is MNC's could introduce more competition which leads to higher efficiency, however this may wipe out domestic firms.
So in conclusion, there are 4 government objectives. First, to have a low and stable inflation rate which means , as a government we have to make inflation rate stable. Lower the inflation rate , it will be better for a country. Inflation means when increase in a price of a products. Second, to have high and stable employment rate , in this case , it would mean that in a country it should be having a stable rate of employment. How to have a stable rate of employment? To have a stable rate of employment, we have to increase the number of jobs available which will automatically reduced the number of unemployment. That is the way how to reduce unemployment. Third, to have high and sustainable economic growth which means that government need to have a high and sustainable economic growth. Lastly, to have stable balance of payment and regulations in international trade. This means a government must have a stable balance of payment (BoP) and controlling the Import and export. There are also plenty of advantages and disadvantages of high number of employment : The disadvantage is high number of employment will upset the country's balance of payment (BoP). The advantages is MNC's could introduce more competition which leads to higher efficiency, however this may wipe out domestic firms.
Leonardo 8B
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Government is the one who make regulations and control the area/country. Government has their objectives to upgrade the quality of the country. These objectives are the goals of government to make a good country, with low and stable inflation, high and stable employment, increase of national income or GDP, positive balance of payment, inequality and the country is sustainable. When these objectives are accomplished, the economic condition and balance of the country will increase. There are 2 types of policies, fiscal policies and monetary policies. Fiscal policy is made up of public revenue, which is taxes and divided into direct taxes and indirect taxes, public expenditure and borrowing or debt service. And monetary policy is done by the central bank, they control the size and rate of growth of the money supply. They maintained it by doing things like increasing the interest rate, changing the amount of money banks need to keep in the bank reserves.
ReplyDeleteFirst, is low and stable inflation. Inflation is a general increase in price of a product or service, and fall in purchase value of money. Inflation happened because of there is an increase in purchase of products and services, to prevent this, the government increase the price. When the price increase, there will be less demand of the products. The increased of price is done by increasing the tax. And to control this inflation, the government should increase tax rate and increase in interest rate, so that when people borrow money from banks and create loan, the money given to government will be more, which will go to the country’s income. The growth rate of money should keep in the steady position, and the aggregate demand must be reduced during the expansion of economy and increase the demand during the situation of recession.
Second, unemployment, unemployment is when a person which in the age of productivity is on, but he or she has no job, or no production. When people has no job, means no money, no money means they cant buy their basic needs, which are shelter, food, clothing. And in order to fulfill those needs, people will do anything because they don’t want to die, so they’ll do anything, the good side is they will find a work, but if theyre lazy or don’t find one, so they will do crime, and crime means that the security of the country is not good, which will cause many foreigners’ company will not dare to invest in Indonesia, and Indonesia will have less employment and also GDP which will cause less economic growth, most problems in a country is caused by unemployment, so government provide more job application to reduce unemployment. When all people is employed, there will be no poverty and crime, and so the country will be in prosperity.
Third, maintained economic growth. Economic growth means the increase or decrease of the national income, when the national income increase, the economic growth of the country will increase and if the national income of country is low so the economic growth will be slow too. When a country’s gdp or national income is good, there will be more public goods produced and the government can publish a free school for the less fortunate children. And then when all people are educated, they can apply for a job and don’t need to be the dirty labour like people who earns money by using their strength. When there is more national income, the government can spend more for their people, they will increase the living standards and the environment.
ReplyDeleteFourth, the BoP of balance of payment. There are two types of balance of payment, positive balance of payment and negative balance of payment. Positive balance of payment happened because in a country, there are more export compared to import, means that the country gain more profits because they sell their products to foreingers, and then the money can be used to make public goods, while negative balance of payment happened when the country spend more money on imports compared to imports.
So in conclusion, the government policies are made in in order to upgrade the country’s condition, usually LEDCs are the one with these problems, because they don’t have a good economy growth so they still become a less economically developing country, while MEDCs means that they are already developed, and they have a good economy so they don’t have to be worry about the problems, yet, that doesn’t mean they can rest, they still must maintain their condition.
Purity:
Source: note book, http://www.investopedia.com/terms/m/monetarypolicy.asp, http://www.ask.com/question/how-to-control-inflation
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ReplyDeleteReferences from Cornell Notebook