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  • Anforme What are the merits of both monetary and fiscal policy to control inflation in the UK?

Anforme What are the merits of both monetary and fiscal policy to control inflation in the UK?

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Andrew Ireson, Oundle School and a Chief Examiner, reviews the impact of macroeconomic policy.

Summary of Key Points:

  • It is important to consider the underlying causes of inflation – whether they are demand-pull or cost-push pressures?
  • Use the components of Aggregate Demand, AD = C + I + G + (X-M), in a systematic way to analyse the effects of any changes in either the rate of interest (the current method of monetary policy used within the UK) or in fiscal policy.
  • Time-lags are important when considering the merits of the policies, as are impacts on the supply-side of the economy.

This article is from ET Volume 16 Issue 3.

 

Andrew Ireson, Oundle School and a Chief Examiner, reviews the impact of macroeconomic policy.

Summary of Key Points:

  • It is important to consider the underlying causes of inflation – whether they are demand-pull or cost-push pressures?
  • Use the components of Aggregate Demand, AD = C + I + G + (X-M), in a systematic way to analyse the effects of any changes in either the rate of interest (the current method of monetary policy used within the UK) or in fiscal policy.
  • Time-lags are important when considering the merits of the policies, as are impacts on the supply-side of the economy.

This article is from ET Volume 16 Issue 3.

 

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