Should monetary and fiscal policymakers try to stabilize the economy - Essay Example

Only on StudentShare

Extract of sample
Should monetary and fiscal policymakers try to stabilize the economy

Also, there is no reason to make people live through the ups and downs that is the business cycle as we know it, and monetary and fiscal policymakers can step in to try to balance out demand, and hence forth stimulate production and employment (Lecture 19). Some people may argue that this is only looking at the "short" run effects, and not taking into consideration the long term effects. Such people would not agree with monetary and fiscal policymakers interfering in the economy, they would rather see less big involvement and a monetary policy based on long term rules(The Short).
"Fiscal or monetary policy can be used to stabilize output and employment around their trend levels, and hence prevent booms or recessions from getting out of hand. When this domestic model is broadened to open the economy to international trade and capital flows, this conclusion no longer holds but the results depend on the flexibility of the nation's exchange rate."(Remarks).
In conclusion, after studying and reading several sources, I have decided that monetary and fiscal policymakers should try to stabilize the economy. This offers a solution to many economic problems, and can help prevent massive swings in our economy, which is always a good thing. ...
Download paper


One of the most debated of all microeconomics policy is if monetary and fiscal policymakers try to stabilize the economy. To some people the answer is simply yes, to others it is simply no, but the answer to the question is a little more complex than that.
Author : ellsworth36

Related Essays

American Economy and Fiscal Policy
To extrapolate this concept further is to eventually lead to the questions that are highly important today considering whether unregulated free market economics is the path to prosperity or is it rather government regulation that puts the brakes on greed.
2 pages (502 words) Essay
Monetary Policy in an economy
However, the effectiveness of monetary in controlling the economy is real terms remains to be a debatable issue.
8 pages (2008 words) Essay
UK Fiscal and Monetary Policy
4 pages (1004 words) Essay
Can the Government Stabilize the Economy (3 sections)
. Such scarcity, whether natural or man-made, makes it necessary for everyone to stretch whatever limited resources he has. Resources can be financial or physical. Practically every one has to make hard choices, to make trade-offs as between one good or service and another. A decision to have one or more of one thing means that one will have less of something else. The relevant cost of any decision is its opportunity cost- the value of the next best alternative one has to give up. Economists stress that one must always calculate the opportunity cost of any specific choice.
9 pages (2259 words) Research Proposal
Government Play Control
Due to this argument, policymakers view economic stabilization as one of their primary responsibilities. So they make laws that will try to stabilize the economy. These lawmakers, together with many economists, believed that in the absence of an active government role in the economy, events like the Great Depression could occur regularly (Mankiw, 1997). Recessions are periods wherein the economy experiences high unemployment rate, as a result there will be lower income and reduced economic well-being. Monetary and fiscal policies can prevent recessions by responding to the shocks in the...
1 pages (251 words) Research Paper
Got a tricky question? Receive an answer from students like you! Try us!