Monday, August 26, 2019

Comparison between US and UK Essay Example | Topics and Well Written Essays - 1000 words

Comparison between US and UK - Essay Example Similarities lie in the way decisions are made economically, in the United States of America, decisions related to economic policies are made by the central bank, by the Federal Reserve Committee, headed by the Federal Reserve chairman. These decisions heavily rely on macro-level economic data, factors such as real estate trends, rates of inflation, patterns of economic growth and home values are indicators that are commonly used. The federal funds' rate is set by the central bank, consequently influencing the rates for consumer and business accounts for savings and loan. Monetary policies are majorly concerned with balancing healthy growth and reduced inflation, or increased prices. This is one of the ways the government tries to control the economy. The fast growth rate of inflation is as a consequence of increased money supply, and when inflation is down this means money supply is down. Generally, the US inflation target is set to maintain the steadiness of the inflation, which sh ould be between 2-3% (GÃ ¤rtner 46). The UK monetary policy is set in almost a similar fashion. It is set by the Monetary Policy Committee (MPC) of the bank of England. Though they are independent in setting the interest rates that will consequently influence the interest rates for savings and loans for individuals and businesses, they must put to consideration governments inflation target. The policy is key in influencing the spending of consumer and Aggregate Demand (AD).

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