Explore BrainMass

Economic Policy

Economic policy is a policy implemented by the government to sustain economic growth and monitor economic systems. It is implemented in order to control interest rates, national ownership, and labor markets. There are different types of economic policies that serve varying purposes. Macroeconomic policies effect economic activity overall while microeconomic policies aim to improve the activity of certain firms, markets, and industries. Some policies are created to aid in economic growth, which therefore relates to development economics.

In order to keep a stable money supply and avoid inflation, macroeconomic stabilization policies are implemented. Monetary policy is when policies are put into effect to control the cost of availability of money and credit. The objectives of this type of economic policy are to reduce the level of unemployment and stabilize the national currency. Other types of policies include trade policies and regulatory policies.

The objectives leading to the enactment of economic policies are the policy goals, which are the outcomes the policy makers want to achieve. Examples of economic policy objectives are price stability, effective income and wealth distribution, environmental damage control, and increase in employment rate. Governments use policy tools such as tariffs and labour market regulations to obtain these objectives.

Policy makers have to be cautious of the negative consequences that can occur when their objectives are obtained. An economic policy that is successful in achieving its objectives, such as economic growth, can have negative effects on the environment. Conflicts can also occur between trying to increase employment rate and achieving a reduction in inflation.

Economic policies change economic activity in three ways: expansionary, when revenue is reduced and/or expenditure is increased; contractionary, when revenue is increased and/or expenditure is decreased; and neutral stance, when the budget is balanced.

Categories within Economic Policy

Government Policies

Postings: 32

Government policy refers to the actions that governments take to resolving economic issues and regulating the economy.

International Policies

Postings: 77

International policies are policies that are adopted by different countries and follow international laws.

Extensive discussion of the "wealth effect"

There has been extensive discussion of the "wealth effect." The argument goes that inflated stock values were partially responsible for the strong U.S. economy of the 1990's. Explain this linkage in words and then illustrate with an Aggregate Demand/Aggregate Supply diagram.

Trade Regulations & Industrial Policies: WTO

Review the World Trade Report 2012 from the WTO on trade and public policies (the executive summary is available for review as well) at the WTO Research and Analysis webpage. As you go through this resource, think about what the significance of both tariff and non-tariff barriers to trade are in today's economy, and how they hav

Budget Emergency and Debt Cycle

I need help discussing and responding to two articles attached: 1. Refers to the article: "YES, MR ABBOTT, THERE IS A BUDGET EMERGENCY" (attached). What is a "budget emergency"? Discuss the reasons why Australia has a "budget emergency". 2. Refers to the 'Household debt locks Danes into vicious circle of decline' (attached

Market Failure: Poverty and Income Inequality

Listed below are several summary statements from the 2010 Census report: - The official poverty rate in 2010 was 15.1 percent—up from 14.3 percent in 2009. This was the third consecutive annual increase in the poverty rate. Since 2007, the poverty rate has increased by 2.6 percentage points, from 12.5 percent to 15.1 percent

E-Business Security

One of the biggest hesitations to E-business is the potential security threats. As an IT-manager what steps would you take to ensure your businesses online system was safe for customers to use?

Are the given statements true or false?

Assume that the demand for plastic surgery price is inelastic. Are the following statements true or false? Explain your answer 1.When the price of plastic surgery increases, the number of operations decreases. 2.The percentage change in the price of plastic surgery is less than the percentage change in quantity demanded.

Economics of Health

Determine whether and how each of the following factors would shift the demand curve for chiropractic visits: a. an increase in the out-of-pocket price of chiropractic visits b. an increase in back problems c. a reduction in the out-of-pocket price for chiropractic visits d. an aging of the population e. an increa

Effects on Demand in a Competitive Market

What effect should each of the following have upon the demand for profitable music players in a competitive market? A) the development of improved, low priced devices that compete with music players B) an increase in population and incomes C) a substantial increase in the number and quality of music for players D) consume

Apply the concept of elasticity on a particular product.

Think of a good that you have purchased recently. Be specific (e.g. is it breakfast cereal in general or Cheerios cereal specifically). ***************************************************************************************************** 1. If the price of this item increases, how would this affect the quantity of the good t

Coase Theory: Mandated Mercury Emissions

How would I use Coase theory to look at mandated mercury emissions? What do you think Coase would say to a supporter of "free market environmentalism" who invoked his work to argue against the need for government intervention to limit mercury emissions from power plants?

Lobbyists and the Media

A formal study of the three branches of government and the way they impact intergovernmental relations necessarily focuses on the executive, legislative, and judicial branches. However, lobbyists and the mainstream media increasingly have a role in how the branches of government interrelate, and how the federal government intera


There are literally thousands of elected officials across the United States at the local, state, and national levels. The two major political parties remain as important to the election and reelection of public officials today as ever before. What impact have political parties had upon relations not only between the state and fe

The Medicare Payment Advisory Commission

The Medicare Payment Advisory Commission recently voted to recommend to Congress to institute a set of pay-for-performance incentives for providers serving Medicare patients. This would include paying bonuses to providers as incentives to meet or exceed certain quality indicators. As an example, consider the following: Diabetics

Why Zero Economic Profit is Called "Normal"

In economic analysis, any amount of profit earned above zero is considered "above normal" because (choose one): 1. normally firms are supposed to earn zero profit. 2. this would indicate that the firm's revenue exceeded both its accounting and opportunity cost. 3. this would indicate that the firm was at least earning

Seasonal Prices of a Resort

A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather related activities; and in summer, golf, tennis and hiking. The resort's operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent

Pricing Strategies for Firms with Market Power

You own a franchise of rental car agencies in Florida. You recently read a report indicating that about 80 percent of all tourists visit Florida during the winter months in any given year, and that 60 percent of all tourists traveling to Florida by air rent automobiles. Travelers not planning ahead often have great difficulty

Prisoner's Dilemma

Firm M and N compete for a market and decide independently how much to advertise. Each can spend either $10 million or $20 million on advertising. If the firms spend equal amounts, they split the $120 million market equally. (for instance, if both choose to spend $20, each firm's net profit is 60-20=$40 million.) If one firm spe

Transport economics, cost functions, total cost, and marginal cost

Cost functions of private car use (use of road infrastructure) Road's average speed of traffic (v, km/h) depends on traffic volume (q, vehicles/h) as follows: v = 50 - q/100 Average travel cost (c, EUR/h) is a function of average speed v such as c = 0,5(3 + 200/v) a) What is the function of total cost C for road u

Important information about Pricing strategies

According to Cahner's In Stat Group, the number of worldwide wireless phone subscribers will soon reach 1 billion. In the US alone, the number of subscribers is expected to rise by 17 million per year for the next 5 years. Contributing to the extensive growth are lower prices, larger geographic coverage, prepaid services, and

Agency problems

1. An article in the Wall Street Journal reported that large hotel chains, such as Marriott, are tending to reduce the number of hotels that they franchise to outside owners and increase the number the chain owns and manages itself. Some chains are requiring private owners or franchisees to make upgrades in their hotels, but the

Public Good

What is a public good? Provide examples. What issues are involved in determining the value of public goods to society?