07 Jun Unit 10 [BU204]Page 1 of 6Unit 10 Assignment: Monetary and Fiscal
Unit 10 [BU204]Page 1 of 6Unit 10 Assignment: Monetary and Fiscal Policy1. Your Assignment should have a cover sheet with the following information:o Your Nameo Course Numbero Section Numbero Date2. You may submit your Assignment using the Unit 10 Assignment template.3. Your answers should follow APA formatting by being in double-spaced paragraph format, withcitations to your sources and, at the bottom of your last page, a list of references. Your answersshould also be in Standard English with correct spelling, punctuation, grammar, and style.4. Respond to the questions in a thorough manner, providing specific examples of concepts, topics,definitions, and other elements asked for in the questions. Your paper should be highlyorganized, logical, and focused.AssignmentThis Assignment will assess your knowledge based on the following outcome:BU204-5: Analyze how monetary and fiscal policy instruments are used to achieve macroeconomicgoals.In this Assignment, your role will be of an assistant researcher in economics. Your job is analyzingthe consequences of the changes in fiscal and monetary policy instruments that may be associatedwith the variations in the U.S. economic conditions. With this in mind, address the following on theeffects of monetary and fiscal policies on the aggregate demand (AD) and short run macroeconomicfluctuations that lead to the recessionary gap and inflationary pressure in the U.S. economy.There are three parts to this Assignment. This Assignment requires a combination of short paragraphanswers, computations, and completion of a 450–500 word essay.One of the main roles of the government is stabilizing the economy to attain macroeconomic goalssuch as price-level stability, full employment, and economic growth. Macroeconomic fluctuations mayoccur due to shifts in the aggregate demand (AD) or shifts in the short-run aggregate supply curve(SRAS) (See Figure 1). Therefore, policymakers every so often strive to counterbalance these ADand AS curve shifts by using monetary policy and fiscal policy instruments in an attempt to reachlong-run equilibrium by closing the recessionary and the inflationary gaps.Unit 10 [BU204]Page 2 of 6Figure 1Fiscal PolicyThe government utilizes fiscal policy instruments (tools) to stabilize the economy and to achieve fullemployment, control inflation, and encourage economic growth. Fiscal policy is planned adjustmentsin the government spending and taxes. This part introduces you to the use of fiscal policy instrumentsto deal with the two major economic problems of recession (unemployment) and inflation. With thisbackground information, answer the following questions on the uses and the effects of the fiscalpolicy tools to deal with the recessionary and the inflationary gaps.Question 1: Fiscal Policy and the Recessionary GapSuppose that the U.S. economy is operating below full-employment equilibrium due to therecessionary gap with high rate of unemployment, and the equilibrium point between AD and SRASoccurs below potential real GDP (See Figure 2). Cognizant of the government plan, answer thefollowing questions on the use of fiscal policy tools during the recessionary gap.Figure 2Unit 10 [BU204]Page 3 of 6a) What is the type of fiscal policy the government uses to close the recessionary gap?b) What are the fiscal policy instruments available to the policy makers and how would they beused? Explain.c) What are the effects of each of the fiscal policy instruments designed to fight recessions on theFederal Budget and the national debt?Question 2: Fiscal Policy and the Inflationary GapSuppose the U.S. economy is operating above full-employment equilibrium, which leads tosignificantly high demand-pull inflationary pressure (see Figure 3). The government plans to use thefiscal policy instruments to close the inflationary gap by shifting the aggregate demand curve. Mindfulof this government strategy, answer the following questions on the use of fiscal policy tools during theinflationary gap.a) What is the type of fiscal policy the government uses to close the inflationary gap?b) What are the fiscal policy instruments available to the policy makers and how would they beused? Explainc) What are the effects of each of the fiscal policy instruments designed to fight inflation on theFederal Budget and the national debt?Figure 3Monetary PolicyThe Federal Reserve System uses monetary policy that involves making planned changes in themoney supply to manipulate interest rates to alter the total level of spending in the economy. Thepolicy goals are achieving price-level stability, full employment, and economic growth. Based on thisinformation, answer the following questions on how the Federal Reserve System applies themonetary policy tools to deal with the recessionary and inflationary gaps.Unit 10 [BU204]Page 4 of 6Question 3: Monetary Policy and the Inflationary GapSuppose the U.S. economy is operating above the full-employment equilibrium due to anoverspending in the economy with significantly high inflation rates (see Figure 4). The FederalReserve wants to design policy plans to reduce the high rate of inflation without causing a recession.Based on this underlying assumption, answer the following questions.Figure 4a) What is the type of monetary policy the Federal Reserve System can undertake to address theinflationary problem?b) What are the instruments of monetary policy that the Federal Reserve System uses to close theinflationary gap? Explain.c) How does management of its money supply enable the Federal Reserve to manage the economyin order to reduce inflationary pressure?Question 4: Monetary Policy and the Recessionary GapAssume the U.S. economy is in a recession operating below potential output (the real GDP) and theFederal Reserve System takes appropriate monetary policy actions to close the recessionary gap(see Figure 5). Anchored in this essential statement, answer the following questions on how themonetary policy tools are used to deal with the recessionary gaps.Unit 10 [BU204]Page 5 of 6Figure 5a) What is the type of monetary policy the Federal Reserve System utilizes in an attempt to closethe recessionary gap?b) What are the instruments of monetary policy that the Federal Reserve System uses to close therecessionary gap? Explain.c) How does management of its money supply enable the Federal Reserve to manage theeconomy in order to reduce recessionary pressure?Question 5: Fiscal and Monetary Policy ApplicationsCompose the following in a 450–500 word essay. Now that you have segmented thecomponents on how fiscal and monetary policies can reduce recessionary and inflationary gaps,you must analyze how the consequences of the changes in fiscal and monetary policyinstruments may be associated with the variations in the U.S. economic conditions. Provideexamples based on your answers above to explain these consequences during a recession, andduring inflationary times.Directions for Submitting Your AssignmentBefore you submit your Assignment, you should save your work on your computer in a location andwith a name that you will remember. Make sure your Assignment is in the appropriate templateprovided. Then, when you are ready, you may submit to the Dropbox.Unit 10 [BU204]Page 6 of 6Unit 10 Assignment: Monetary and Fiscal Policy PointsPossiblePointsEarnedContent and AnalysisQuestion 1, part a.Correctly explained the type of fiscal policy used to for a recessionary gap. 3Question 1, part b.Correctly explained how each fiscal policy tool is used in a recession. 4Question 1, part c.Correctly explained the impact of recessionary fiscal tools on the FederalBudget and national debt.3Question 2, part a.Correctly explained the type of fiscal policy used to for an inflationary gap. 3Question 2, part b.Correctly explained how each fiscal policy tool is used in an inflationary gap. 4Question 2, part c.Correctly explained the impact of inflationary fiscal tools on the FederalBudget and national debt.3Question 3, part a.Correctly explained the type of monetary policy used to for an inflationarygap.3Question 3, part b.Correctly explained how each monetary instrument helps close theinflationary gap.4Question 3, part c.Correctly explained how changing the money supply impacts inflation. 3Question 4, part a.Correctly explained the type of monetary policy used to for a recessionarygap.3Question 4, part b.Correctly explained how each monetary instrument helps close therecessionary gap.4Question 4, part c.Correctly explained how changing the money supply impacts a recession. 4Question 5Analyzed the impacts of the changes in the fiscal and monetary policy toolson the U.S. economy. Explained the effects of the fiscal and monetary policytools during recessions and inflationary times.4Writing style, grammar, and APA formatting. 5Total 50
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Wridemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.