Fiscal Policy

Tuesday, 8 – 12 – 2015

Through fiscal policy, the government should adopt a deficit budget, When Is Done, it will reduce the inflationary pressyre on an economy

  1. a) Increase in Taxes

Increase in taxes wilo reduce the disposable income of individuals and their Consumption

Of good and services. This will turn lead to fall in Prices.

b) Decrease in Government spending

A reduction in government expenditure wilol directly affect aggregate demand. The governme Project to reduce the purchansing power of the public

Monetary Policy which consists of controlling the supply money by the central bank is Enforced by using the different monetary Instruments hich aim at reducing the supply of money.

will cut the salary of all civil nservants and Postpone in Development

Raising the discountrate/Bank

A rise in the bank rate show that the central bank’s monetary policy is directed towards credit squeeze to control Inflation

 

Raising the interest rate

The central bank would persuade commercial banks to Increase their rates of interest on deposit from the public

Selective credit control policy

Selective credit control policy takes the form of issuing directives to commercial banks prohibiting them from lending against certain commodities or reducing the total credit limit granted to the public

Sumber :

  1. Moynihan. D & Brian Titey. (2015). Economics, A Complete Course for IGCSE and O Level: University of Cambridge International Examination.

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Dan Moynihan & Brian Titey. (2015). Economics; A Complete Course for IGCSE and O Level. 2015. hlm ..

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