Monetary policy vs. Fiscal policy?
•Which policy does the president have more of an effect on, if any at all?
•Are most people ignorant of economics? If so to what degree does politics get in the way of economics (i.e. a politician can run on a platform that may seem to benefit the public economy, however in essence he is just taking advantage of peoples ignorance e.g. cut taxes which can an adverse effect )
•Assuming that many people are for the most part ignorant of economics, does this allow for abuse by people who are well informed as every one will listen?
•At the end of the day the world is constantly changing, from an economic stand point so how can we apply a old method is it not in a way just experimenting and for what ,as what ever the outcome it may no longer apply as the economic condition may have changed .
Answer:
The president has more of an effect on the fiscal policy rather than the monetary policy because the fiscal policy instruments are government spending , taxes and autonomous consumption. Think about it. the president send more troops to Iraq that is spending on the government behalf those billions and gazillion of dollars have a severe impact on the economics of the country. The president can choose to increase taxes and when that happens, output and production decreases because factor inputs cost more now (more tax has to be paid to make the same good).
Monetary policy is only controlled by the central bank and in the case of the US, it's called the federal reserves - for other countries, it's called the central banks - aka the bank for banks.
I see your second question deals with taxes, so if suppose the government (president) decides to cut back on taxes, this will lead to an increase in output based on the following relationship
Y= C(y,t)+I(i,y)+G+nX
Can I suggest you compare what we have today in medical discoveries and what was available at the time of Francois Quesnay (the first economist)? He was using what he understood for the flow of blood in the human body (quite different from what we know in 2007) to describe the beginnings of mercantilism.
It is good the world keeps changing...when do you think we will mature enough to get rid of the zoo metaphors of the donkey and elephant we got from Thomas Nast for the US parties of Democrat and Republican?
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•Are most people ignorant of economics? If so to what degree does politics get in the way of economics (i.e. a politician can run on a platform that may seem to benefit the public economy, however in essence he is just taking advantage of peoples ignorance e.g. cut taxes which can an adverse effect )
•Assuming that many people are for the most part ignorant of economics, does this allow for abuse by people who are well informed as every one will listen?
•At the end of the day the world is constantly changing, from an economic stand point so how can we apply a old method is it not in a way just experimenting and for what ,as what ever the outcome it may no longer apply as the economic condition may have changed .
Answer:
The president has more of an effect on the fiscal policy rather than the monetary policy because the fiscal policy instruments are government spending , taxes and autonomous consumption. Think about it. the president send more troops to Iraq that is spending on the government behalf those billions and gazillion of dollars have a severe impact on the economics of the country. The president can choose to increase taxes and when that happens, output and production decreases because factor inputs cost more now (more tax has to be paid to make the same good).
Monetary policy is only controlled by the central bank and in the case of the US, it's called the federal reserves - for other countries, it's called the central banks - aka the bank for banks.
I see your second question deals with taxes, so if suppose the government (president) decides to cut back on taxes, this will lead to an increase in output based on the following relationship
Y= C(y,t)+I(i,y)+G+nX
Can I suggest you compare what we have today in medical discoveries and what was available at the time of Francois Quesnay (the first economist)? He was using what he understood for the flow of blood in the human body (quite different from what we know in 2007) to describe the beginnings of mercantilism.
It is good the world keeps changing...when do you think we will mature enough to get rid of the zoo metaphors of the donkey and elephant we got from Thomas Nast for the US parties of Democrat and Republican?
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