Page 11 - FINAL CFA I SLIDES JUNE 2019 DAY 6

Session Unit 5:

18. Monetary and Fiscal Policy

LOS 18.o: Describe roles and objectives of fiscal policy, p.119

Keynesians - impacts on AD, hence economic growth, given less than full employment

Monetarists - ONLY temporary; Rather use monetary policy to control inflation!

Discretionary fiscal policy – G and T intended to stabilize the economy

Automatic stabilizers are built-in fiscal devices triggered by the state of the economy;
E.g. during a recession, T falls, and G on UIF will increase.

• Influencing the level of AD and economic activity

Objectives of fiscal policy:
• Redistributing wealth and income

• Allocating resources among economic agents/sectors;