The Impacts Of Fiscal And Monetary Policy Economics Essay

The Impacts Of Fiscal And Monetary Policy Economics Essay In this paper we are going to analyze the impact of monetary and fiscal policy in the UK economy by initially using the IS-LM BP framework and later on Philips curve under flexible and fixed exchange rate regimes by supposing perfect capital mobility. The LM curve outlines the point at which there is an equilibrium condition of quantity of money demanded and quantity of money supplied (Dornbusch and Fisher 1994). As aggregate output rises, there is an increase for money demand and rise in the interest rates where the money demanded equals money supplied by resulting in the equilibrium. The IS curves shows out the point at which the total quantity of goods produced equals the total quantity of goods demanded (Dornbusch and Fisher 1994a). At any level of the interest rate, the IS curve shows us what aggregate output has to be for the goods market to be in equilibrium. By rising the interest rates, planned investment spending and net exports fall, which as a result lowers aggregate demand. In the first part of the literature review we will present how monetary and fiscal policy can be implemented under flexible exchange rate regimes, while in the second part there will be analysis of how monetary and fiscal policy can be implemented under flexible exchange rate regimes. The last part of this literature review we will explain the Philips curve under the above mentioned policies. Fiscal Policy under Flexible Exchange Rates In this section we will demonstrate the impact of fiscal policy in the UK economy by using IS-LM BP model. An expansionary fiscal policy will involve an increase in government spending or a decrease in taxes. At any interest rate, if there is an increase in government spending there will be an increase in aggregate demand. This leads to an increase in the demand for goods which is shown by the IS curve which moved to the right as shown in Figure 1. At point E1 at the new equilibrium, where the goods market is in equilibrium but money market is not, resulted in an increase in income, which naturally consequences in increase in demand for money leading to an increase in the interest rates at i2. While there is an increase in the foreign interest rate there is a capital inflow because of the fact that foreign investors seek to take over the advantage of higher returns by buying domestic assets. As the interest rate is increased above the foreign interest rate, capital inflows as foreign investors seek to take advantage of the higher return by buying domestic assets, Blinder B. (2006). The capital inflow because of the rise in interest rates pushes the interest rates back to initial equilibrium and because of the fact that investors buy pounds it increases the demand for pound in the foreign exchange market, which leads to the appreciation of the pound. By appreciating the pound, UK assets become more expensive in relation to foreign assets and as a result the net exports decreases. Any decrease in the net exports (NX), shifts the IS to the left until the capital inflow stops. Because the IS shifts to the left, the domestic interest rate will equal the foreign interest rates and will go back to the initial equilibrium Eo. This means that the fiscal policy under flexible exchange rate regime and perfect capital mobility has a little effect in increasing national output Oliver.B (2009). Monetary Policy under Flexible Exchange Rates By using IS-LM BP framework, we can also explain the effects of the monetary policy under flexible exchange rates regime as we explained in the fiscal policy. An increase in the money supply for any given interest rate it shifts the LM to the right and giving pressure on the domestic interest rate, Ahtiala P (1998). The shift of the LM curve to the right by increasing money supply is shown in the Figure 2. Because of the increase in money supply, there will be a fall in the interest rate which will lead to a capital outflow. An increase in the money supply also causes pound to depreciate in the domestic market. Because of the depreciation of the pound and fall in the interest rates in the UK market, the domestic assets become inexpensive in relation to foreign assets which results in an increase in the net exports (NX). An increase in the net exports also increases aggregate demand which shifts the IS curve to the right at the point E2 as it is shown in Figure 2. By shifting the IS curve to the right at point E2, there is an increase in the output as well from the initial equilibrium to the Y1. This shift to the right of the IS curve increases the output and the domestic interest rate then equals to the foreign interest rate. In this case, because of the increase in the natural output and the adjustment of the interest rates, it is very obvious that fiscal policy is more effective rath er than monetary policy under the flexible exchange rate regime, Dornbusch and Fisher (1994b). Fiscal Policy under Fixed Exchange Rates Under fixed exchange rate regime, an increase in government spending or a tax cut will shift the IS curve to the right from the initial equilibrium Eo to the point E1 as it is illustrated in the Figure 3. When the IS shifts to the right, more specifically at the point E1, interest rates increases and by doing so, there will be more capital inflow in the country from foreign investors. This is very much simple, since the higher the interest rates, the more the attractive domestic assets will be for international investors and as a result the higher will be the inflows of foreign capital in the domestic market Zapatero and Cadenillas (2000). The inflow of capital in the country and the increase demand for pounds leads to an appreciation of the pound. The shift of the IS from the initial position to ISà ¢Ã¢â€š ¬Ã¢â€ž ¢ creates a new equilibrium E2 where the output of the economy is higher. Thus, the use of fiscal policy under fixed exchange rate is more effective in creating higher dom estic output in an economy. Under the fixed exchange rate regime, if a Central Bank decides to increase money supply, the LM curve shifts to the right from the initial equilibrium E0 to the new equilibrium E1 as it is illustrated in the Figure 4. At the new equilibrium, the interest rate decreases, so there will be more outflow of the domestic capital to foreign markets. By the fact the there is an outflow of the domestic capital in the foreign markets, the demand for pounds will decrease which leads to a depreciation of the pound. According to Mishkin (2007), when the domestic currency is depreciated, the central bank must sell its international reserves and buy the domestic currency. It is obvious that by buying the domestic currency from the central bank, its supply decreases and there is a less money in circulation, which means that a money decrease shifts the LM curve to the left by bringing it to its initial equilibrium Eo. From the facts above and from the figure we can conclude that the monetary policy under fixed exchange rate regime is not effective in raising domestic output. This negative relationship between unemployment and inflation in the short run is explained by the Philips curve. In contrary, in the long run Philips curve is vertical line which is at the natural rate of unemployment. To explain the Philips curve, we must use the aggregate demand and aggregate supply in order to see the swap between inflation and unemployment, Nason and Smith (2008). If an expansionary fiscal or monetary policy is implemented, the aggregate demand will increase and it will move the economy to the higher output (in the short run), which will decline the unemployment. However, in the long run, because of the fact that aggregate demand increased and prices have increased, produces buy capital and pay workers at a higher price, which means that the IS will shift to the right, unemployment will start to rise again and the economy will end up at the initial output. In conclusion, it depends from the type of the economy in order to prove the effectiveness of the fiscal and monetary policy. Usually, in a open economy, if a country chooses to keep fixed exchange rate the fiscal policy is very effective tool for increasing the domestic output, however, monetary policy is not effective. On the other hand, if a country decides to keep flexible exchange rate regime the effectiveness of monetary or fiscal policy would be opposite to the fixed exchange rate regime.

Leadership Styles :: essays research papers

The style of leadership that would be the most comfortable for me would be delegation. One of the first signs of good supervision is effective delegation. Delegation is when supervisors give responsibility and authority to subordinates to complete a task, and let the subordinates figure out how the task can be accomplished. Effective delegation develops people who are ultimately more fulfilled and productive. Managers become more fulfilled and productive themselves as they learn to count on their staffs and are freed up to attend to more strategic issues. Delegating is a critical skill for supervisors. Delegating involves working with an employee to establish goals, granting them sufficient authority and responsibility to achieve the goals, often giving them substantial freedom in deciding how the goals will be achieved, remaining available as a resource to help them achieve the goals, assessing their performance, addressing performance issues and/or rewarding their performance. Ultimately, the supervisor retains responsibility for the attainment of the goals, but chooses to achieve the goals by delegating to someone else. True delegation means giving up a little of what we would like to hold onto while keeping what we might prefer to give up. Participative style of leadership would be least comfortable for me. A participative leader, rather than making decisions, looks to involve other staff in the process. Often however, as it is up to the manager to decide how much influence others are given, this style can only work well, when both managers and staff understand and are in agreement about which tasks are important. The staffs expertise, experience and intuition need to be encouraged, not stifled, if challenging situations are to be negotiated. The goal of the participative leader is to persuade followers to share their values and connect with their vision. It appears to me, to be obvious that most large organizations, the federal government, the military, etc., require leaders and followers that possess the same core Leadership Styles :: essays research papers The style of leadership that would be the most comfortable for me would be delegation. One of the first signs of good supervision is effective delegation. Delegation is when supervisors give responsibility and authority to subordinates to complete a task, and let the subordinates figure out how the task can be accomplished. Effective delegation develops people who are ultimately more fulfilled and productive. Managers become more fulfilled and productive themselves as they learn to count on their staffs and are freed up to attend to more strategic issues. Delegating is a critical skill for supervisors. Delegating involves working with an employee to establish goals, granting them sufficient authority and responsibility to achieve the goals, often giving them substantial freedom in deciding how the goals will be achieved, remaining available as a resource to help them achieve the goals, assessing their performance, addressing performance issues and/or rewarding their performance. Ultimately, the supervisor retains responsibility for the attainment of the goals, but chooses to achieve the goals by delegating to someone else. True delegation means giving up a little of what we would like to hold onto while keeping what we might prefer to give up. Participative style of leadership would be least comfortable for me. A participative leader, rather than making decisions, looks to involve other staff in the process. Often however, as it is up to the manager to decide how much influence others are given, this style can only work well, when both managers and staff understand and are in agreement about which tasks are important. The staffs expertise, experience and intuition need to be encouraged, not stifled, if challenging situations are to be negotiated. The goal of the participative leader is to persuade followers to share their values and connect with their vision. It appears to me, to be obvious that most large organizations, the federal government, the military, etc., require leaders and followers that possess the same core

Social Organized Crime Perspective

Social Organized Crime Perspective Social Organized Crime Perspective Social institution is a group of people or association with a certain reason, objective, or mission. This organization reaches its goal by influencing and persuading people in the public to take part, and help with reaching this purpose. Social institution applies to organized crime in various ways. Criminal organizations develop in areas that show a portion of individuals living within the jurisdiction are interested in a product that the criminal organization is offering. This is crucial as it enables the organization to effectively generate, dispense, and consume the product (Lyman & Potter, 2007). Additionally, criminal organizations target the community's social makeup, control the community has socially on its members, and the level of involvement each community member has among the rest. Furthermore, criminal organizations develop tight relations with lawful businesses and owners willing to play a part in the organizations accomplishment (Lyman ; Potter, 2007). There are empirical and speculative theories that are can be applied to organized crime and criminal behavior. Individuals involved with organized crime in Sicily and Italy had formed criminal organizations such as the â€Å"Sicilian Mafia† or â€Å"Cosa Nostra†. These persons came to the United States to avoid detection and apprehension by law enforcement in their own country, and to gain opportunities that the United States provided both legally and illegally. Upon migrating to the United States these groups began to organize, and operate many criminal organizations. It is believed that these individuals have been the main cause for the establishing of organized crime (Osmosis, 2003). The social control theory asserts that an individual who is involved with a community and has strong family relations will be less likely to engage in illegal activity than those who do not. If an individual is capable of establishing a positive rapport with community members, becomes involved and participates in community programs, such as youth, elderly, religious-spiritual, and anti-crime, the individual will most likely refrain from engaging in criminal activity or at the very least consider the consequences of a criminal act prior to committing the act (Psychological Glossary, 2010). The differential association theory considers one's social group and environment as the fundamental explanation for one's criminal behavior and the formation and joining of criminal organizations. An individual who socializes with a group or other individuals who have a history with the legal system or who engage in illegal activity are at an extremely higher risk to conform to the norms of that particular social sub-group. A prime example is a teenager who becomes involved in delinquent criminal behavior and activity as a result of peer pressure. These juveniles are susceptible to withdrawing from school, joining criminal organizations, such as street gangs, and experimenting with illegal substances and alcohol, all of which continues the juvenile down a path of addiction, career criminality, and a long criminal history into adulthood (Sutherland, 1978). The strain and anomie theory believes that individuals who engage in criminal activity do so as a result of wanting a piece of the American dream or to obtain materialistic items of value. A majority of individuals within the United States never experience the luxury of owning a fancy vehicle, house, business, or property. Most individuals residing in the United States are forced to work labor intensive jobs, receive a low paying wage, are parents who must provide and support families, and do so through legal means. Unfortunately, the desire to achieve items of value, provide a better life for one's children, such as the purchasing of school cloths, vacations, and after school activities can force some to conduct illegal business for the purpose of gaining an additional income (Sutherland, 1978). The empirical and speculative theories discussed, such as the social control, differential association, and strain and anomie theories can assist researchers, society, professionals, and law enforcement with understanding the elements that exist in different criminal organizations and criminal behavior. Each theory is supported by research, statistics, strong arguments, and facts that can be used by law enforcement in numerous ways. Theories as such display characteristics and mannerisms common in criminal behavior, along with what geographical locations are susceptible to the development of criminal organizations and activity. Furthermore, jurisdictions, in which its citizens are antisocial or uninvolved with the community, prove to be breeding grounds for many types of criminal wrongdoing that exists. References Lyman, M. , & Potter, G. (2007). Organized Crime (4th ed. ). Upper Saddle River, NJ: Pearson/Prentice Hall. Osmosis. (2003). Everything: Historical interpretations on Prohibition and organized crime. Retrieved December 10, 2011, from http://everything2. com/title/Historical+interpretations+on+Prohibition+and+organized+crime Psychological Glossary. (2010). Social Control Theory. Retrieved December 10, 2011, from http://www. psychology-lexicon. com/cms/glossary/glossary-s/social-control-theory. html Sutherland, E. (1978). Differential Association Theory: Sociological Theories of Deviance. Retrieved December 10, 2011, from http://www. d. umn. edu/~jhamlin1/sutherland. html

Speaking Up For The Ones Who Can Not - 1562 Words

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Health Beauty Close - Up interviewed some animal organizations who says a puppy mill is, â€Å"a dog-breeding operation, which offers dogs for monetary compensation or remuneration, in which the physical, psychological and/or behavioral needs of the dogs are not being fulfilled due to inadequate housing, shelter, staffing, nutrition, socialization, sanitation, exercise, veterinary care, and/or inappropriate breeding† (Pet Industry and Animal We lfare Organizations Team to Address Puppy Mill Abuse). Some farming industries end up treating their animals bad their entire lives or not even giving them the chance at life. Breeding farm animals or dogs in mills should be banned because of terrible living conditions, breeding being used for their profits, and giving animals illness or causing death. Animal breeding for shelter dogs and farm animals leads toShow MoreRelatedFear of public speaking Essay1389 Words   |  6 Pagesyou’re burning up. 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