Uploaded by Vireen A Chainani

IB 15 mark examples

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Expansionary Monetary Policy
A recent example of expansionary monetary policy was seen in the U.S. in the late 2000s during the
Great Recession. As housing prices began to drop and the economy slowed, the Federal Reserve began
cutting its interest rate from 5.25% in June 2007 all the way down to 0% by the end of 2008.1 With the
economy still weak, it embarked on quantitative easing, purchasing government securities from January
2009 until August 2014, for a total of $3.7 trillion
Contractionary Monetary Policy
In april 2022 fed announced they will sell 95 billion dollar bonds to cool down economy inflation.
(UK 2018)
Expansionary Fiscal Policy
1932, fiscal policy became more expansionary and may have helped to end the Great Depression in the
US
US 2009 at the death of the great recession 800billion dollars to economy from new spending and tax
cuts funding new roads and bridges which caused jobs
Contractionary Fiscal Policy
In the United States, the most recent large-scale use of contractionary fiscal policy came during
President Bill Clinton’s time in office (1993–2001), when he increased taxes on high-income taxpayers
and decreased government spending on both defense and welfare. As a result, the United States
government went from being in debt to having a budget surplus. 28 to 36% for high income individuals
Supply-side policies
Tax cut:
Finance Minister Amit Mitra has written to his counterpart at the Centre, Nirmala Sitharaman, urging her
to take measures to increase demand in the economy as the
have "failed" to boost the manufacturing sector. Gross fixed capital formation, which was Rs 12.3 lakh
crore in the first quarter of 2019-20, fell to Rs 10.2 lakh crore in the corresponding period of the current
fiscal, - "a fall of an investment by Rs 2.1 lakh crore, despite your corporate tax cuts", he said in the
four-page letter.
https://economictimes.indiatimes.com/news/economy/policy/supply-side-policies-failed-switch-to-dem
and-stimulation-bengal-fm-writes-to-sitharaman/articleshow/86114044.cms
Investment
​https://www.cbo.gov/publication/57407
Deregulation:
Sweden government removed minimum wage floor in jan 2013 because they feel that it will bring the
price of labor down
Reducing power of trade unions:
Expansionary Fiscal Policy
American Recovery and reinvestment act of 2009 – was undertaken during the financial crisis of 2008
and it totaled $831 billion on spending mainly targeted at infrastructure, education and extension of
unemployment benefits
Singapore government introduced the resilience package which included an increase in expenditure on
infrastructure during the global financial crisis.
Real life Examples of EMP:
Fed implemented EMP following great recession, lowing interest rates to stimulate AD. They cut IR from
5.25% in 2007 to 0% in 2008.
In 2020 when COVID struck, the fed also implemented EMP. It purchased 500 billion $ in Treasury bills to
stimulate the economy.
Real Life Examples of SSP:
Skills future credit in SG to encourage individuals to take ownership of their skills development and
lifelong learning, introduced in 2015 - intervensionist
Continuing Education & Training(CET) was a masterplan that aims to prepare SG workforce for the
future. Launched in 2008 and refreshed in 2014. - interventionist
The Hartz IV labor market reforms in Germany which leads to considerable degree of wage moderation
which makes labor cheaper
Sweden government removed minimum wage floor in jan 2013 because they feel that it will bring the
price of labor down
Thatcher and Reagan created laws where unions must announce that they are striking in order to
minimize strikes etc. - UK and US in 1980s
Antimonopoloy regulation - The Clayton Act: defines unethical business practices, such as price fixing
and monopolies, and upholds various rights of labor. 1914 prevents anti competitive mergers
Grab and uber were fined $13 million by singapore as an anti monopoly regulation to increase
competitiveness and to ensure the market is not dominated by
Privatization - in 2009 The Greek government finalized the privatization of Olympic Airlines on Monday.
Marfin Investment Group agreed to pay €177.2m ($224.3 million) for Olympic in direct negotiations with
the government, after the failure in January of an international tender to find a strategic investor.Mar 24,
2009
Infrastructure spending Singapore government introduced the resilience package which included an increase in expenditure on
infrastructure during the global financial crisis.
India infrastructure 1.4 trillion spending in 2019 with israel US and UAE
Privatization:
1.4 billion $ sale of BA to private section. Two-thirds of the 720 million shares have been allocated to
institutions, British Airways employees and foreign investors, and the remaining third will be offered to
thousands of small British investors, a strategy in keeping with Prime Minister Margaret Thatcher’s
privatization program.
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