Brieflydiscuss fiscal and monetary policies that may

stabilize our economy?

Stabilization of the economy is one of the goals that the government attempts to achieve

through manipulation of fiscal and monetary policies. When inflation is high the government can

have issued a contractionary fiscal policy to cut spending or raises taxes to reduce the money

available for businesses and consumers to spend. But when unemployment is high the

government can have issued an expansionary fiscal policy that includes tax cuts, transfer

payments, rebates, and increased government spending on projects such as infrastructure

improvements infusing the economy with more money through government contracts. An

example of expansionary fiscal policy is (TRAIN) The tax Reform for Acceleration and

Inclusion, It decreases tax through the exemption of minimum wage earner in paying tax. The

increase of government spending through allotment of more budget on Education and training to

polish human capital helps also to stabilize our economy by creating employment and to lessen

education and skills mismatch. It is where the inadequacy between the workers attain a level of

education has been treated to fit for their required job description. Monetary policies to stabilize

the economy is administered by the central bank independent from the political process and not

managed by the government. Its main purpose is to monitor and control the money supply. The

BSP thru the monetary board issued monetary policies that cut interest rates to boost aggregate

demand. The Monetary Board may increase or decrease the reverse repurchased rate to

reduce or inject money supply to help stabilize the economy.

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