I need help understanding the following. Can you explain them? I need to summari

Question

I need help understanding the following. Can you explain them? I need to summarize them in two paragraphs for economics but I want to understand them better first.

a:how the theories of Adam Smith and John Maynard Keynes are seen in our present American Free Enterprise System

b:how U.S. fiscal policies affect the economy and the differences between expansionary and contractionary fiscal policies

c: how U.S. monetary policy functions and the tools the government uses to put these policies into action.

Explanation / Answer

1)They are seen in the US system as the '2 main pillars' of US free enterprise and US capitalism. 'Smith' the older is favored by US political 'conservatives' , 'Keynes' a little more recent (early 20th century) is favored by the US political 'liberals'.
Neither could get along without the other.
Both are 'mainstream' economics, although minority political extremists on both sides take either 'theory' way out to weird extremes for their own current purposes, never imagined by their creators and not supportable

2)Expansionary fiscal policy means that the government is increasing government spending and reducing taxation in an attempt to increase the money available in the economy. Its purpose is to increase growth and reduce unemployment by increasing the demand for labour. The way this happens is that the government spends more thus demanding more labour for public works and teh public is taxed less which means tehy have more money to demand goods thus increasing demand for goods and as a result growth and demand for jobs. Its main drawback is that if teh government isnt careful it can lead to inflation.

Contractionary fiscal policy is when the government increases taxation and reduces government spending in an attempt to reduce money in the economy and as a result inflation. The reduced demand because the government wont demand and the people will have less money to do so will mean that prices will decline thus reducing inflation. Its main drawback is that it can lead to stunted growth and unemployment.

3)n the US, the fed (specifically, the open market committee) uses open market operations to conduct monetary policy. The Fed will sell or buy government bonds via the New York fed to raise or lower interest rates, respectively

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.