Fiscal Policy: Use of Government Spending, Taxation, and Borrowing

Changes in the Government policy
What are the main tools that the government manage the economy?
The government manage the economy by using the fiscal policy. The Fiscal policy involves the use of government spending, taxation and borrowing to affect the level and growth of collective demand, output and jobs. Another way the government manage economy is by using the monetary policy. This policy is designed to attempt to influence variables like the balance of payments, currency exchange rates, inflation, and employment by increasing or decreasing interest rates and controlling the money supply.
Explain the term monetary policy.
The monetary policy is designed to attempt to influence variables like the balance of payments, currency exchange rates, inflation, and employment by increasing or decreasing interest rates and controlling the money supply.
Explain the term quantitative easing?
Quantitative easing is described as a monetary policy; it is used by central banks to increase the supply of money by increasing the excess reserves of the banking system.
How is the current UK government managing the economy?
The UK is currently upping the taxes across the UK. They are trying to offer loans out to people who do not have the financial support they should have. They are also trying to help people in the recession by offering in them longer terms for repayment.
Explain how changes in tax rates may affect Tesco?
If the government puts the tax rates up the UK’s population would not have as much money. This would mean when they go shopping in tesco they would not spend as much money as they normally would or they would go to another store where they can get the same products for a cheaper price. This would affect Tesco as they would not make as much profit as they were making and losing customers.
Explain the term fiscal policy
Fiscal policies include the government's power to levy taxes and spend revenue on the various public programs and services. Through its abilities to tax and spend, government is an active participant in a nation's economy.
Examples:
Identification
• The legislative and executive branches of government (in the U.S., Congress and the president, respectively) control fiscal policies.

Types
• Fiscal policies include government taxation and spending measures. Governments often use fiscal measures, such as tax cuts and spending increases, in times of economic weakness.
Famous Ties
• The 2009 economic stimulus package, passed in the early weeks of President Obama's administration, is an example of using fiscal policy to stimulate the economy.
Effects
• Through fiscal policy, government tries to impact such economic outcomes as the unemployment rate and the Gross Domestic Product (GDP).
Considerations
• Fiscal policy often has a multiplier effect, in which government spending increases economy-wide demand for goods and services, leading to higher employment and growth.
Warning
• Fiscal policy, such as higher government spending, can spark inflation, leading to higher interest rates, which reduce investment by raising the cost of borrowing.
How is the Chinese Government managing the economy?
The Chinese government are responsible for planning and managing the national economy. Several aspects of the economy were administered by specialized departments under the State Council, including the State Statistical Bureau, General Administration of Civil Aviation of China, and China Travel and Tourism Bureau.