Macroeconomic Policies in a Global Context
- Due to globalisation, economies do not operate in isolation but are highly interdependent
- This means that the effectiveness of any of the macroeconomic policies & direct controls used by a government is dependent on the global environment
- The extent to which it is dependent is influenced by the size & development of the economy
- The extent to which it is dependent is influenced by the size & development of the economy
- Different approaches are used by different governments to attempt to solve the same problem
- E.g. After the Global Financial Crisis of 2008, the UK Conservative led government initially used a Keynesian approach to bailing out the banks & then quickly followed this with a contractionary demand-side policy of austerity. The Democratic led USA Government also used a Keynesian approach to rescuing financial institutions & then followed it up with further expansionary fiscal & monetary policy
- E.g. After the Global Financial Crisis of 2008, the UK Conservative led government initially used a Keynesian approach to bailing out the banks & then quickly followed this with a contractionary demand-side policy of austerity. The Democratic led USA Government also used a Keynesian approach to rescuing financial institutions & then followed it up with further expansionary fiscal & monetary policy
The Use of Policy Measures To:
Aim | Explanation |
Reduce fiscal deficits & national debts
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Reduce poverty & inequality
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Changes in interest rates & the supply of money
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Increase international competitiveness
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