Policy tools

这是一篇关于Policy tools的思维导图，Changes in the budget don't necessarilyoriginate in presidentialdecisions or congressional legislation.

Policy tools

• Fiscal policy
  • Tool
    • Tax
      • cut
        • Goal：Stimulate spending by putting more income in the hands of consumers and business
      • increase
        • Goal:Curtail spending and thus reduce inflationary pressures
    • government spending
      • cut
        • Goal: Raise aggregate demand and so encourage more production
      • increase
        • Goal: Restrain aggregate demand, lessening inflationary pressures
  • • Active or passive
      • Active：fiscal policy
        • changes in the budget from government
      • Passive：Automatic stabilizers
        • changes in the budget not from government
        • Mean
          • • Changes in the budget don't necessarilyoriginate in presidentialdecisions or congressional legislation.
        • Example
          • Economy slows——tax cuts——government spending increases
          • Reession——welfare increase——government spending increases
          • Economy heats up——tax increases——government spending cuts
  • Discretionary Policy
    • president
      • congress
• Monetary Policy
  • Tool
    • Open-market operations
    • Discount rate change
    • Reserve requirements
    • Goal：change the money supply
  • Monetary（rule） vs fiscal（disretion）
    • Monetary better
      • Because of repeated U-terns in monetary policy
    • Fiscal better
      • Because fical policy（rule）is not assured, it depends on consistent market responses to monetary-policy levers
• The effectiveness of two policy depend on the shape of aggerate supply curve
• Supply-side policy
  • Goal
    • shift the aggregate supply curve to the right
      • promote long-term growth
      • make short-run demand-side intervention more successful
  • Tool
    • Tax rate
      • basic tool
      • Goal：Stimulate work effort
    • Investment
      • The most popular and powerful tool
    • Deregulation
      • Goal：Reduce production costs and stimulate investment
    • Expenditure on education，training
      • Goal：Expands our capacity to produce
    • Imigrantion policy
      • Goal：Alter the size and skills of the labor force and thus affects aggregate supply as well
• Purpose: To fight the business cycle Boost GDP growth