Feb.1-2010 International Monetary and Financial System

Feb.1-2010 International Monetary and Financial System -...

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International Monetary and Financial System Government Policies and World Economy: Macroeconomic Policies(fiscal and monetary) Microeconomic Policies (regulations, subsidies, price control, antitrust policies and labor laws…) Exchange rate policies Trade policies Policies about foreign capital investments and financial flow. Immigration and labor laws Macroeconomic Policies: Fiscal Policy : Taxes and budgeting(Spending) Balanced budget = no impact on the economy Deficit = stimulating economy, creating demand o Government spending more than taking in from taxes and revenue Surplus = slowing economy o Government spending less than taking in. Monetary Policy: Role of Central Banks, i.e., Federal Reserve(U.S. Central Bank) Increased money supply = lowered interest rates = increased demand Decreased money supply = increased interest rates = decreased demand Mechanics of Foreign Exchange: Foreign Exchange – the currency of another country that is needed to carry out
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Feb.1-2010 International Monetary and Financial System -...

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