The principal tools of macroeconomic policy are monetary policy and fiscal policy. Monetary policy in the United States is under the control of the Board of Governors of the Federal Reserve System. The Federal Reserve controls the supply of money and credit in a number of ways. The most important Federal Reserve instrument stems from its authority to purchase and sell government securities in the so-called open market. Credit tightening, for example, may be accomplished by an open-market sale. The purchases of the government securities transmit money balances to the Federal Reserve, thereby reducing the nations money supply. This, in turn, reduces bank lending power and drives up the cost of borrowing. The hoped for outcome is less borrowing and spending by the private sector of the economy. The Federal Reserve is also empowered to lend funds to its member banks. It may raise or lower the interest rate (the rediscount rate) at which it lends the funds, thereby discouraging or encouraging bank borrowing.
The other principal tool of macroeconomic policy is fiscal policy. This means the use of the federal budget to add or subtract purchasing power from the economy. To stimulate the economy, government expenditures may be raised directly or taxes may be reduced, thereby site set of policies could be employed if aggregate demand is excessive, because higher taxes and less government spending would reduce total spending and help slow inflation.
The principal vehicle of fiscal policy is the federal budget. The annual budget plan is developed by the administration and submitted for review by the congressional budget committees. Changes in the tax code must be legislated by the Congress, and the tax system is administrated by the Internal Revenue Service under the general supervision of the Secretary of the Treasury.
Beginning in 1983, the economy experienced mammoth budget deficits that, in five of the next eight years, exceeded 200 billion dollars. These huge deficits make it very difficult to use fiscal policy as a tool of economic stabilization in as much as tax cuts to stimulate the economy would further add to the size of the deficit. Some macroeconomists bemoan the virtual loss of fiscal policy as a stabilization tool, and others, usually described as monetarists, welcome it because they have never believed in the efficiency of fiscal policy as a stabilization tool.
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I. , . . .
1. He studied many subjects.
2. The students had passed the exam by two oclock yesterday.
3. You are playing chess, arent you?
4. Im sorry I havent written before because Ive been very busy lately.
5. This book was written by our teacher.
6. The students are translating the sentences from English into Russian now.
7. The letter had been written before we came.
8. Who was talking on the telephone at that time?
9. They may take my book.
10. Will you try to enter the university?
II. . .
1. Den studies at the University.
2. I translated many articles every day.
3. He has just spoken to her.
4. We will take our final exams in June.
5. The students were working very well.
III. .
1. you translate the text?
2. She will to answer these letters tomorrow.
3. I do it.
4. I didnt want to go there but I to.
5. Drivers go at 60 kilometers an hour here.
IV. some, any, every, no .
1. I havent got friends in England.
2.... you help me.
3. He showed me papers.
4. is ready.
5. is here.
