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Monetary Policy, Fiscal Policies and Labour Markets Essay

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Explain the differences between: fiscal policy and monetary policy

Fiscal policy and monetary policy are two instruments government applies to with the purpose to encourage the national economy and sometimes to curb the excess growth. Trying to consider the differences between fiscal policy and monetary policy in brief, the following information may be stated, fiscal policy directs national economy, while monetary policy deals with money supply in the national economics. Fiscal policy deals with national economics while monetary policy is directed at banks.

Fiscal policy works with taxation and monetary policy helps to make the national economy stable. Fiscal policy sets the national economics, while monetary policy sets the plans of the key banks (Chadha, 2008). Considering the situation from the point of view of control, it should be stated that fiscal policy is “changes in the taxing and spending of the federal government for purposes of expanding or contracting the level of aggregate demand” (Fiscal policy vs. monetary policy, n.d., p.) while monetary policy being under the control of the Federal Reserve System is “the changes in interest rates and money supply to expand or contract aggregate demand” (Fiscal policy vs. monetary policy, n.d., p.).

Dwelling upon more specific differences, it may be said that monetary policy deals with macroeconomic stability at it is, while fiscal policy is more about dealing with macroeconomic conditions aimed at successful functioning of the national economy. The central difference between these two policies lies in the sphere of influence, as it has already been said. Fiscal policy affects national taxation system and the amount of money in the annual cycle, while monetary policy deals with banks and currency (Beetsma, Favero, Missale, Muscatelli, Natale, & Tirelli, 2004).

How has the stock market (DOW average) and the economy (job creation & GDP) performed, since the 1961, under Democratic and Republican Presidents?

To give the basic vision of the situation, Clinton stated that during the presidency of the Democrats, the private-sector jobs increased by 24 million places, while Republicans managed to add only 24 million positions. Considering the same rate but not just within the private-sector but referencing to the government data, 48 million new jobs were offered by the Democrats in comparison with 31 million for Republicans.

Comparing and contrasting the e S&P 500 stock index during the presidency of Democrats and Republicans, it raised by 12.1% and 5.1% respectively. The difference in GDP growth is also significant and in the favor of Democrats who managed to raise the activity up to 4.2%, while the presidency of Republicans gave only 2.2% growth per year Newman, 2012). Looking at the time period from 1961 up to 2000, Democrat presidents ruled the country for 20 years and Republican ones also ruled the country for 20 years. During their presidency, the following activities may be states,

% Per Annum Democrat Republican Bush43
GDP Growth 4.1% 2.9% 2.2%
Employment 2.9% 1.7% 0.5%
CPI 4.0% 5.1% 3.0%
DJIA 8.1% 6.5% 0.9%
Dollar +0.8% -3.6% -5.9%

Table 1. How the U.S. Economy Performed Under Democratic and Republican Presidents (2008).

Finally, one more idea aimed at proving that democrats were better in economical performance. According to the MFS Investment Management research report, the stock market presented a better performance when incumbent party won the elections (Mahn, 2012). Therefore, all the activities show that the ruling of Democrats brought more advantage to the country than the presidency of Republicans from the economic point of view.

In what ways can Congress exercise control over the federal bureaucracy?

Considering this problem in detail, it may be stated that Congress has three main powers which may be exercised with the purpose to control the federal bureaucracy. Congress can easily achieve this control if some particular actins are taken. First of all, the Congress has the right to conduct investigations of those agencies which employees are suspected in misconduct. Moreover, the cases may be brought to the court and people can be suited if Congress has the proofs of deception (Bardes, Shelley, & Schmidt, 2011).

Second, Congress has the power to shape the laws and the agencies have to put them into effect. Such strategy may allow Congress to control legally the actions of the federal bureaucracy and to make sure that the laws are followed. The difficulty in this case is created by the fact that federal hearings are not usually full and the Congress has to interfere into the actions of the federal bureaucracy in order to maintain discipline and control (Abood, 2010).

Finally, Congress has the financial power over the federal bureaucracy as the fourth branch of power in the country. Congress has a direct opportunity to control the amount of money the agencies authorize to spend in a planned period of time and to follow the amount of money the agencies actually get for their purposes (Ragone, 2010). Therefore, it may be concluded that the Congress has both legal and financial power over the federal bureaucracy and can apply all the measures in order to maintain discipline in the sector in case something goes wrong.

Reference List

Abood, R. (2010). Pharmacy Practice and the Law. New Jersey: Jones & Bartlett Learning.

Bardes, B. A., Shelley, M. C., & Schmidt, S. W. (2011). American Government and Politics Today 2011-2012: The Essentials. Stamford: Cengage Learning.

Ragone, N. (2010). The Everything American Government Book: From the Constitution to Present-Day Elections, All You Need to Understand Our Democratic System. New York: Adams Media.

Beetsma, R., Favero, C., Missale, A., Muscatelli, V. A., Natale, P., & Tirelli, P. (2004). Monetary Policy, Fiscal Policies and Labour Markets: Macroeconomic Policymaking in the EMU. Cambridge: Cambridge University Press.

Chadha, S. (2008). Fiscal and Monetary Policy. The Economic Times. Web.

. (n.d.). East Tennessee State University. Web.

. (2008). Currency Thoughts. Web.

Mahn, K. (2012). . Instablog. Web.

Newman, R. (2012). Bill Clinton Is Right: The Economy Really Does Do Better Under Democrats. US News. Web.

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1. IvyPanda. "Monetary Policy, Fiscal Policies and Labour Markets." January 12, 2021. https://ivypanda.com/essays/monetary-policy-fiscal-policies-and-labour-markets/.


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IvyPanda. "Monetary Policy, Fiscal Policies and Labour Markets." January 12, 2021. https://ivypanda.com/essays/monetary-policy-fiscal-policies-and-labour-markets/.

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IvyPanda. 2021. "Monetary Policy, Fiscal Policies and Labour Markets." January 12, 2021. https://ivypanda.com/essays/monetary-policy-fiscal-policies-and-labour-markets/.

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IvyPanda. (2021) 'Monetary Policy, Fiscal Policies and Labour Markets'. 12 January.

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