Monetary policy

Discuss an economic outlook forecast that includes the following:

• Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years.
• Discuss how government policies can influence economic growth.
• Analyze how monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables.
• Describe how trade deficits or surpluses can influence the growth of productivity and GDP.
• Discuss the importance of the market for loanable funds and the market for foreign-currency exchange to the achievement of the strategic plan.
• Recommend, based on your above findings, whether the strategic plan can be achieved and provide support.
  
  
• The two policies the government can employ to influence economic growth and inflation are MONETARY and FISCAL policy. … To increase spending in the economy and encourage economic growth, the government may lower interest rates and increase the supply of money however this can cause an increase in inflation.
• Balance of trade has a positive relationship with both productivity and GDP. A trade surplus raises the measure of GDP, and a trade deficit lowers the GDP. Now a trade surplus does not directly impact productivity, but it increases the potential for productivity. A trade deficit has the opposite effect.
  

   

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