Explore BrainMass

business investment and government economic policy

"Monetary policy remains quite accommodative, with short-term real interest rates still close to zero. In addition, fiscal policy will likely continue to provide considerable impetus to domestic spending through the end of this year."

What does he mean by the above statement and what indicators would he use to illustrate his position. Explain both the monetary and fiscal indicators.

"Despite a dramatic increase in cash flow, business fixed and inventory investment, taken together, have risen only moderately. Indeed, internal corporate funds exceeded investment over the course of last year for the first time since 1975."

When he talks about business fixed and inventory investment, what part of the national income model is he referencing and what indicators would you use to illustrate that statement.

Solution Preview


He means that economic policy is obviously trying to stoke an economic recovery. With interest rates (indicator: Federal funds rate) close to zero, corporate and consumer borrowers can borrow at very low interest rates, thus encouraging corporate investment and ...

Solution Summary

Government economic poliocy and Business investment

He means that economic policy is obviously trying to .......