The use of government policy in the economy
The use of government policy in the economy is to keep law and order in the country and regulate all the money’s. A typical way the government tries to influence countries is by adjusting the price of borrowing. The federal government guides the overall pace of all economic activity.
Due to the fact that the FED can execute monetary policy effectively, they can keep stability in their prices. The most appropriate time to use fiscal policy would be at a time when our country is in a recession. If inflation becomes too much we sould also use fiscal policy. Some specific tools used in monetary policy would include: interest rates, reserve equipment, and open market operations. As for fiscal policy, tools used to stimulate and stabalize would be: taxes and spending.
In my opinion and to conclude, I would say a combination of both monetary and fiscal policy is what I would use to stimulate aggregate demand. Each brings its own helpfulness at different times. Also both can influence the factors used to calculate it.
Sample Solution
Government policies contain the reasons things are to be done in a certain way and why. Government policy describes a course of action, creating a starting point for change. The use of government policy in the economy is to keep law and order in the country and regulate all the moneys. Government use spending and taxing powers to promote stable and sustainable growth. Fiscal policy is the use of government spending and taxation to influence the economy. Government typically use fiscal policy to promote strong and sustainable growth and reduce poverty. The government should use a combination of both monetary and fiscal policy to stimulate aggregate demand. Each brings its own helpfulness at different times. Also both can influence the factors used to calculate it.
