A high interest rate policy or tight money policy reduces the volume of money in the market while a low rate of interest or soft money policy expands money supply. China is likely to shore up GDP by investing, once again. Interest rate is major instrument of regulating money supply. The World Bank has set China’s 2022 growth forecast to 5.1 percent, a much slower pace of growth than China averaged in previous decades. Monetary policy is used to regulate money supply in the market. Such a situation is alarming and thus must be avoided. Over the time, such recurrent budget deficits and borrowings lead to a ‘debt-trap’ where the government has to borrow even for payment of interest and loan installments. with these objectives in view, the governments often spend much more their normal revenue receipts.Įxcess of expenditure over revenue leads to budgetary deficit, which is largely met through public borrowings. Resource Mobilization 2: Capital Markets. Mobilization of Resources 3: Government Finances. India and WTO Detailed Analysis of All Related Issues and Concepts. The fiscal policies are often used for stabilising economic activity and promotion economic development. ECONOMIC SURVEY 2019 Summaries Volume 1 and 2. Thus, policies to speed up development in the less developed countries and maintaining the tempo of growth in the advanced economies are necessary to curb the evil of unemployment. Unemployment is a major problem of the underdeveloped countries, but even the advanced countries suffer from cyclical unemployment. Inflation is particularly distressing for the poor and the fixed income group. Inflation and deflation which affect both the developed as well as the underdeveloped countries also form a major macroeconomics issue. The major macroeconomic issue for the less developed countries is to speed up rate of economic development to ensure better living standard of the people.Ĭontrol of business cycles and minimizing in income, output and employment caused by recurrent booms and recessions is a major macroeconomic issue for the advanced capitalist economies. While the underdeveloped countries face the problems of lack of development, low living standards, poverty and chronic unemployment, the advanced capitalist countries suffer from cyclical fluctuations in output, income and unemployment. Problems of economic growth, business, cycles and economic fluctuations, inflation, unemployment, poverty, etc., are some of the major macroeconomic issues.