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  • Intervention As A Policy Tool

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    Abrar Najeeb
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    The document discusses how governments can intervene in the economy through fiscal and monetary policy tools such as tax laws and money supply levels. It also explains how governments can influence the economy by changing exchange rates of the domestic currency. A weak domestic currency can increase exports and reduce unemployment but also increase inflation. In contrast, a strong domestic currency can increase foreign competition and lower prices but also increase unemployment and reduce domestic production.

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    Intervention

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    The document discusses how governments can intervene in the economy through fiscal and monetary policy tools such as tax laws and money supply levels. It also explains how governments can influence the economy by changing exchange rates of the domestic currency. A weak domestic currency can increase exports and reduce unemployment but also increase inflation. In contrast, a strong domestic currency can increase foreign competition and lower prices but also increase unemployment and reduce domestic production.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    13 views6 pages

    Intervention As A Policy Tool

    Uploaded by

    Abrar Najeeb
    The document discusses how governments can intervene in the economy through fiscal and monetary policy tools such as tax laws and money supply levels. It also explains how governments can influence the economy by changing exchange rates of the domestic currency. A weak domestic currency can increase exports and reduce unemployment but also increase inflation. In contrast, a strong domestic currency can increase foreign competition and lower prices but also increase unemployment and reduce domestic production.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 6

    INTERVENTION

    AS A POLICY
    TOOL
    INTERVENTION AS A POLICY
    TOOL
    • Government can influence the economy
    of the country by intervening in the tax
    laws and money supply
    • Similarly government can influence the
    economy by changing the exchange
    rates.

    12/09/21
    2
    INTERVENTION AS A POLICY
    TOOL

    • Influence of a weak home currency


    on the economy

    • Influence of a strong home currency


    on the economy

    12/09/21
    3
    Influence of a weak home currency
    on the economy
    • Increased exports due to increased
    foreign demand for low priced goods

    • Unemployment is reduced

    • Inflation is increased

    12/09/21
    4
    Influence of a strong home
    currency on the economy
    • Foreign competition rises due to
    increased demand for foreign goods

    • Prices are reduced

    • Inflation is overcome

    • Unemployment rises
    12/09/21
    5
    Government monetary and fiscal
    policy

    Relative Relative Relative national


    interest rates inflation rates income levels

    International International
    Exchange rates
    capital flows trade
    Purchase
    and sale of
    currency Quotas,
    Tax laws tariffs
    Government intervention in
    foreign exchange market

    12/09/21
    6

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