Macro economic policies in a global context
Use of fiscal and monetary policy, exchange rate policy supply side policies and direct
controls and its impacts on
- National debt
- Poverty and inequality
- Interest rates and supply of money
- International al competitiveness
Looking at the response to economic shocks using macroeconomic policies
Measures to control transnational companies.
Problems of policy makers
Measures for poverty and inequality
- Taxation redistribution of wealth from progressive taxation and inheritance
tax. However higher taxes can reduce incentive to work (laffer curve)
- Transfer payments eg job seekers allowance / welfare payment and national
minimum wage (however can cause more unemployment due to higher
labour unit costs) also reduce incentive to work.
- Provision of goods and services eg education and healthcare investment in
human capital to reduce relative inequality through skill creation and labour
mobility into industries with higher wages. Make production more labour
intensive can capital intensive by increasing labour productivity and output
per worker for skill creation. Increasing tax on capital/ interest rates.
- Legislation: national minimum wage, anti-discrimination laws
- Investment in diversifying avenues for economic growth in different
industries so wage rises not only in one sector. Increasing job prospects.
- Regulation of the gig economy and 0-hour contracts increasing employment
standards (however can lead to firms moving to different countries with looser
labour regulations)
European agriculture fund for rural development helping with income in the
sector strengthening environmental and social sustainability management of
natural resources and balanced territorial development in different sectors for
reducing inequality and unbalanced growth.
Measures to increase international competitiveness.
-Investing in human capital to reduce unit labour costs to increase relative labour
productivity/ factor productivity to increase LRAS increasing investment in
education and training so relative unit labour costs are proportional to output
per worker as wages don’t rise faster than productivity. Korea has one of the
lowest humans to physical capital investment ratios in the world. raising the skills
of workers can move them beyond the agricultural and manufacturing sector and
expand south korea’s profitable economic sectors.
Use of fiscal and monetary policy, exchange rate policy supply side policies and direct
controls and its impacts on
- National debt
- Poverty and inequality
- Interest rates and supply of money
- International al competitiveness
Looking at the response to economic shocks using macroeconomic policies
Measures to control transnational companies.
Problems of policy makers
Measures for poverty and inequality
- Taxation redistribution of wealth from progressive taxation and inheritance
tax. However higher taxes can reduce incentive to work (laffer curve)
- Transfer payments eg job seekers allowance / welfare payment and national
minimum wage (however can cause more unemployment due to higher
labour unit costs) also reduce incentive to work.
- Provision of goods and services eg education and healthcare investment in
human capital to reduce relative inequality through skill creation and labour
mobility into industries with higher wages. Make production more labour
intensive can capital intensive by increasing labour productivity and output
per worker for skill creation. Increasing tax on capital/ interest rates.
- Legislation: national minimum wage, anti-discrimination laws
- Investment in diversifying avenues for economic growth in different
industries so wage rises not only in one sector. Increasing job prospects.
- Regulation of the gig economy and 0-hour contracts increasing employment
standards (however can lead to firms moving to different countries with looser
labour regulations)
European agriculture fund for rural development helping with income in the
sector strengthening environmental and social sustainability management of
natural resources and balanced territorial development in different sectors for
reducing inequality and unbalanced growth.
Measures to increase international competitiveness.
-Investing in human capital to reduce unit labour costs to increase relative labour
productivity/ factor productivity to increase LRAS increasing investment in
education and training so relative unit labour costs are proportional to output
per worker as wages don’t rise faster than productivity. Korea has one of the
lowest humans to physical capital investment ratios in the world. raising the skills
of workers can move them beyond the agricultural and manufacturing sector and
expand south korea’s profitable economic sectors.
