Lecture 9- Government macroeconomic policies

Fiscal policy of government refers to its plans & its & system. UK government’s fiscal policy is administered by , which is led by

Budget sets out plan of government & ways in which it expects to money. In budget statement government will announce new

Budget deficit- When is greater than each month/year

National debt- Total amount by government

Every time government has budget deficit it to total debt

Government raises funds from . One form of tax in UK is (taxes placed directly on ) & another form is (taxes paid when or buys product)

One purpose for use of taxation by government is to to finance its

Another purpose for use of taxation by government is to change ’ & ’ behaviour, e.g. to make some products (such as cigarettes) more & less

Third purpose for use of taxation by government is to make less competitive. If you are goods from overseas, then you may have to pay to government which is an attempt to help businesses

Final purpose for use of taxation by government is to income. This may be done so there is more (use rate tax to income to people who are earning )

Government spending takes many forms. One form is government spending by e.g. on services & facilities. Another form is government spending e.g. on &

Public sector spending can also be analysed in terms of how much goes on (day-to-day) & how much goes on (which is for future)

Multiplier measures how much increases relative to an initial change in , e.g. caused by change in . How much increases depends on (measures extra on consumption out of each extra )

Monetary policy- Uses control of & to influence economy. Bank of England is set an inflation target by . Bank of England will then in economy to achieve this . Its main tool is

Quantitative easing occurs when such as Bank of England creates new money & uses this to make purchases of assets. These purchases are made from sector i.e. from pension , high-street & non-financial . Most of these assets are (also known as gilts). Government bonds are IOUs sold by to raise money. This pushes up of assets, lowering (return) on them. This those selling these assets to use money they received from to buy assets with yield instead, such as company &

Exchange rate- of one in terms of

Exchange rate policy- Exchange rate of country can change with changes in & conditions in foreign currency . This changes prices of UK products & price of foreign products in pounds. may intervene in currency markets to influence of currency. It may do this to price. This will help businesses with their . It may intervene to affect of exports or of imports (& therefore costs & inflationary pressures)

Exchange rate may be affected by various factors. They are changes in by Bank of England & currency

Supply side policies- Government policies aimed at making work more to
increase & of resources available in economy. They are aimed at increasing on an economy

One way government may intervene using supply side policy is through intervening in to make funds more easily available for to fund

Another way government may intervene using supply side policy is through developing of economy to help to compete more

Third way government may intervene using supply side policy is through ensuring that work &

Fourth way government may intervene using supply side policy is through helping to be more

Fifth way government may intervene using supply side policy is through intervening to make work better

Sixth way government may intervene using supply side policy is through helping to start up & do by reducing procedures necessary to do so