FINANCE

Fiscal Policy and Government Spending

Fiscal Policy and Government Spending

This paper mainly deal with the issues of obtaining the internal balance of payments and stability, equilibrium in a country that considers high unemployment, interest rates are at almost zero, inflation is about 2% per year, and GDP growth is less than 2% per year. It is perceived that fiscal and monetary policy can be utilized as independent instruments for the purpose of obtaining two aims and objectives if capital flows are used as a responsive instrument to inflationary interest rate. It is concluded that it needs an attention that how the policies by the government, are paired with those objectives. Particularly, it is mainly discussed and argued that monetary policy should be aiming at external objectives while fiscal policy should be implements by considering at internal objectives. If the government is failed by not comply this prescription, it can make the situation of an economy worse than before the changing of policy when it was introduced. These can reflect the negative effects when it will become inadvisable to alter the exchange rate or to impose trade controls. I will increase the inflation that will decrease the rate of unemployment in a country. This act approach to the concept of Phillips' curve as unemployment and interest rate are having an inverse relationship between them (Feldstein et al., 1983).

When the stabilization measures are restricted and limited to monetary and fiscal policy. The practical thought of this theory reflects the surplus in a country that experiences the pressure of inflation. Thus, it is essential to raise taxes, and monetary conditions, reducing the spending of government, interest rates should be tighten and lowering taxes or increase the spending of government in a situation where deficit country experiences from unemployment and inflation.

As a President, I would ...