What are the pros and cons of these macro policies? Watch

The gains kinggg
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Supply side policy
Monetary
Fiscal?

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cunnttttssss100
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Monetary policy
pros
Interest rate targeting can control inflation
Central banks can implement policy fairly quickly
Central banks are independent and so have no political agenda

cons
Risk of hyperinflation from inflation rate targeting
effects often have a time lag
monetary tools are general but affect the whole country (may sacrifice the wellbeing of individuals)

Fiscal policy
pros
short time lag- a tax or subsidy has a fairly immediate effect
direct spending to specific purposes i.e giving subsidies to exporters to increase AD
can help re-distribute incomes (rich will be progressively taxed more)

cons
subsidies may be spent on imports reducing AD
can be politically motivated
dependent on the other components of AD- i.e if consumer expenditure falls because of increased interest rates, taxation will have little effect
dependent on the extent to which it is implemented- if taxes are greatly increased then it is likely to have a large effect if not then the effect is likely to be low

Supply side policies
pros
increase productive possibility in an economy (AS), resulting in long run economic growth
can reduce inflation (if AS increases to an extent to which AD is no longer in the vertical area)
cons
dependent on extent to which it is implemented
only effects AS


be aware that all the different sectors within policies (i.e education and increased health care within supply side) will have different pros and cons, but they are mostly obvious.. good luck
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