Introduction
Fiscal and monetary policy are the main financial instruments that help regulate the country’s economy. These standards regulate banks and stabilize the entire system if necessary. Based on this, fiscal and monetary policy affects many aspects of the life of citizens of the country, providing them with convenience in everyday affairs and doing business (Excel High School, 2022). Understanding the prospects of these policies and possible steps to improve them can lead to an increase in the efficiency of the economic system and an increase in the well-being of citizens.
Perspectives of Fiscal and Monetary Policy
The most critical perspective of fiscal and monetary policy is that it plays a significant role in stabilizing the country’s financial flows. This, in turn, can significantly impact such aspects as stimulating economic growth, taxation, and control of public spending. Suppose the problems that may arise in these areas must be adequately addressed. In that case, bottlenecks such as a recession or budget deficit can create economic issues.
Another critical perspective is to look at politics from the standpoint of the stability and reliability of an integral economic system. The predictability of monetary policy can help build long-term planning. Thus, maintaining sustainable and predictable growth can affect people’s economic opportunities. Lower income can increase population stability and spread business opportunities. However, this will also create a need for more budgetary funds, which makes it essential to think about and regulate policy.
A balanced fiscal and monetary policy management can help establish a more stable system. Checks and balances in this regard are of critical importance since they can be used to prevent the distortion of economic benefits for any one group of the population. For example, encouraging the development of enterprises in the field of environmental energy sources can create adverse financial conditions for competitive areas. This, in turn, will lead to their bankruptcy and a decrease in revenues to the country’s budget. Research confirms that balancing fiscal and monetary policies can positively impact the development of a crisis-resistant economy (IMF, n. d.). Thus, maintaining a balance in the financial sector is critical to maintaining a stable inflow of money.
Policy Change Step-By-Step
To achieve the maximum balance in financial resource policies, building a sustainable infrastructure through investment will be necessary. The first step in policy change is to create jobs to strengthen the economic stimulus. Critical infrastructure projects should receive more investment. For example, affordable housing can increase people’s mobility ability if they get better jobs.
The second step of change is to ensure financial accountability by creating a system of checks and balances to ensure no concentration of power is possible. This change should apply to all management persons to ensure fair and fair decision-making. Another important aspect of the changes is to support monetary policy through more flexible standards. Interest rates must be dynamic to accommodate changes in the country’s economic condition and prevent the risk of inflation (Abdelnour et al., 2022). Changing the policy this way can allow more careful control of all financial processes.
Fiscal policy is greatly influenced by politics, as power determines the direction in this area. Therefore, an important component may be suffrage as a way for people to influence fiscal policy in a country. Election cycles themselves can lead to short-term fiscal policy due to the shortsightedness of single-term politicians (IMF, n.d.). Thus, politics directly determines the country’s monetary and tax policy formation.
Conclusion
In conclusion, fiscal and monetary policy are extremely important for taking a comprehensive approach to solving economic problems. Therefore, these standards are important for the well-being of citizens and should be as effective as possible. To do this, a necessary condition is the implementation of timely and planned changes that will improve the policy. Investment and balance must be added to address the risks of inflation and recession.
References
Abdelnour, A., Bykowsky, E., Nading, J., Reasor, E. & Sood, A. (2022). Five ways to adapt pricing to inflation. McKinsey & Company. Web.
Excel High School. (2022). Economics. Web.
IMF. (n. d.). Monetary policy: Stabilizing prices and output. International Monetary Fund. Web.