Macroeconomics: comments

star of the advantages of using fiscal form _or_ system of disposal would be the fact that all of the policies be depressive disorder this regime are all graduate(prenominal)ly impersonal since all of the decisions to practice regarding the set of the delivery are all based on the empiric data and not on the assess conceit of the administration authorities. Moreover, m whiztary policy is more pliant than fiscal policy since the Federal propagate Market Committee meets about every six weeks to make decisions regarding the modify of the economy and the immediate implementation of the said decisions (Faculty.etsu.edu, 2007).On the other hand, one of the contingent draw back from using fiscal policy would be the fact that monetary policy only offers short term sparing employment and do not guarantee a sustainable activity in the long run. Moreover, monetary policy can easily be affected by external factors such as oil bell hike and exchange rate which has a direct tack on the performance of any monetary policy the federal government shortly have.As for the advantages of fiscal policy, this can subjoin the government revenue through and through the process of raising the tax rate and/or tariff on import goods. Moreover, fiscal policy can also attract productivity as the government provides incentives to those domestic and foreign investors just to keep the economy in balance. On the other hand, fiscal policy, is relatively less flexible a compared to the monetary policy since it takes a long time earlier the government officials make decisions regarding the scotchal conditions of the country.Oftentimes, they only meet once a year to settle all of the economic policies that the federal government entrust implement for the rest of the year. Moreover, fiscal policy intervenes into the private sector which sometimes causes economic losses on the part of the consumers and the producers, like tax. Fiscal policy is also highly subjective and u nremarkably based on the value judgment of the federal officials even if there are empirical facts at hand.Answer 1.2One of the possible factors that trigger crowd out would be through expanding the government get in order to finance an increase in expenditure. Cutting of tax can also lead to crowding out since private sector is being crowd out from their coronation through higher interest rate. In other words, when the government raises its borrowing in the money grocery place, it causes an increase of the interest rate in the market which crowds out private investors and individuals from the lending market.Answer 1.3Automatic perk uprs like reducing on tax rate tend to mitigate output variation without any explicit government action therefore, there is no fill for the government to make discretionary policies or make value judgment regarding a certain economic situation since automatic stabilizers already reduces the economic puzzles that the government officials impart have to solve.Answer 2.1Whenever there is a high inflation rate existing in the economy, what then government usually does is to lower d own its spending in order to put insistency for the aggregate demand of the economy to depreciate making way for the decline in market prices. At the end of the day, inflation rate starts to in arrears down as the aggregate spending decreases due to the cutting of government spending. In other words, high inflation rate causes figure exorbitance since the government has to regulate its spending.On the other hand, whenever there is a low inflation rate in the economy, the tendency of the government is to intentionally scram cipher deficit since it has to increase its spending to create additional market for the business sector which eventually stabilize the market price condition. In short, if there is a low inflation rate, it is expected that the government will incur budget deficit due to the increase of its spending to stabilize the market price.Answer 2.2I believe yes, size of assets must serves as basis in judging the budget deficit, in order to teach how the government spends with respect to the amount of assets that it presently holds. Having a large government asset can give way for a higher budget deficit since the government can use those assets as collaterals for those persons or financial institutions where the government will borrow money just to finance its activities. In short, having a large budget deficit is not a problem for as long as the government has large amount of assets on its hands.Answer 2.3Pay-as-you-go is a system of paying a debt as they incurred, or it is a system of paying a good or returns as it is used than as n outright purchase. One of the possible applications of this would be the pay-as-you-go tax wherein it is a system of paying a debt of businesses or individuals on an installment basis of their expected tax liability.Answer 3Now I understand why the government sometimes acquire s budget deficits and how inflation rate is related to the budget condition of our government. I see this issue interesting since although there is no direct relationship amid inflation rate and government budget condition, still, after noting all of the economic factors in our country, it is clear that inflation affects the government budget condition indirectly and vice versa.Moreover, I learned that the federal government uses either monetary or fiscal policy depending on the type of economic condition is at hand based from the identified strengths and weaknesses of the two policy regime. It is affect how these policies affects all the economic activities in the country although we cannot see it through our own eyes. Its just like these policies are acting invisible in our economy and solving economic turmoil of our country. At the end of the day, whichever policy regime will the government implement, what is important would be the end effect of all of the policies that the go vernment will put into action to solve a given economic problem.ReferencesFaculty.etsu.edu. (2007). Fiscal versus Monetary Policy. Retrieved March 19, 2008, from http//faculty.etsu.edu/hipples/FPvsMP.htm