What is an example of an expenditure dampening policy?

What is an example of an expenditure dampening policy?

These are policies designed to lower real incomes and aggregatedemand and thereby cut the demand for imports. E.g. higher direct taxes, cuts in government spending or an increase in monetary policy interest rates.

What is meant by expenditure dampening?

This policy aims at reducing overall expenditure in the country as well as on imports, in order to reduce the outflow of money from the economy. As spending falls, local producers will feel demand for their products has become ‘dampened’ so they shift to foreign buyers.

What is expenditure switching policies?

Expenditure switching is a macroeconomic policy that affects the composition of a country’s expenditure on foreign and domestic goods. More specifically it is a policy to balance a country’s current account by altering the composition of expenditures on foreign and domestic goods (see Balance of payments account).

What is a expenditure policy?

• Public expenditure policy is a continuous political/bureaucratic. process through which governments decide: (i) which activities. should be undertaken by the government; and (ii) what is the. most efficient way of producing those public sector outputs. Expenditure Policy.

What is called expenditure reducing policy?

Fiscal policy (which involves taxes and government expenditures) and monetary policy. (which affects interest rates and the rate of monetary growth) are the main measures to achieve expenditure. reduction. Expenditure switching policies are measures that shift expenditure between the domestic and external.

Which policy is an example of an expenditure switching policy?

An expenditure reduction policy is something like a tax increase or a reduction in government spending, whereas the classic example of an expenditure switching policy, which switches demand from foreign to domestic goods, are tariffs (and perhaps exchange rate changes if there is price rigidity).

What is expenditure reducing in economics?

Expenditure-reducing policies aim to reduce demand in the economy, so spending on imports fall. Expenditure-switching policies aim to switch consumer spending towards domestic goods, and away from imports. Reducing the growth of the supply of money in an economy can be expenditure- reducing or expenditure-switching.

What are the objectives of public expenditure?

In the modern era, public expenditure has the following objectives: (a) provision of collective wants in order to optimise society’s consumption in a rational way and to maximise social and economic welfare. (b) Control of the depressionary tendency in the market economy.

What are the types of government expenditure?

Definitions and Sources

• Recurrent expenditure – all payments other than for capital assets, including on goods and services, (wages and salaries, employer contributions), interest payments, subsidies and transfers.
• Capital expenditure – payments for acquisition of fixed capital assets, stock, land or intangible assets.

Is devaluation expenditure switching policies?

Expenditure-switching policies, devaluation or revaluation is the most focused policy to affect current account balances and the equilibrium level of output. Devaluation increases the domestic price of imports and decreases the foreign price of exports; therefore, it decreases imports and increases exports.

Is a type of expenditure reducing policy?

Measures a government may undertake to improve an imbalance in the current account. Reducing overall spending in the economy (including on imports) by raising income taxes and reducing government spending (contractionary fiscal policies) can improve the trade balance. …

What is the purpose of expenditure dampening policy?

Expenditure dampening is a policy which seeks to reduce consumer consumption of imported goods. The government can dampen by increasing rates to make the imported goods cost more. What is expenditure dampening?

What is the purpose of Public Expenditure Policy?

• Public expenditure policy is a continuous political/bureaucratic process through which governments decide: (i) which activities should be undertaken by the government; and (ii) what is the most efficient way of producing those public sector outputs

How are expenditure-reducing policies help the current account?

Expenditure-reducing policies Measures a government may undertake to improve an imbalance in the current account. If a nation has a large current account deficit, a decrease in spending on imports move the current account towards surplus.

What are the effects of expenditure switching policy?

The implementation of an expenditure switching policy can lead to some adverse effects – Less importing means consumers cannot consume and enjoy using wide varieties of products, choice fades and living standards fall. Devaluing the currency will have little effect when importing crucial goods and services such as oil and foodstuff.