College of Administrative and Financial Sciences

2nd Tri, SY 2021-2022

Final Project

FINAL PROJECT SCORE SHEET

Instructions:
 Answer ALL questions and meet all requirements
 Marks will be awarded for good presentation and thoroughness in your approach
 Complete this sheet and attach it to your final project output.

Total number of pages including this cover page

Program Course Section Time/Days Due Date D

BSIB BUSI532 11/April/2022

Course Title MACROECONOMICS

Mohammed hassan Ali BH20500422

Abdulla Yousif Saif BH19500196

Student’s Full Name /
Dhuwa Hamad BH19500554
ID No
Sara Ahmed Janahi BH17500288

Khalifa Mahmood Yousif BH19500795

Professor’s Name Salman Ebrahim Almutawa

FOR OFFICIAL USE ONLY

Teacher’s/Marker’s Comments Marking Scheme
TOOLS OF MONETARY
10
POLICY

IMPACT OF FISCAL
10
POLICY

PRESENTATION 10

Marker’s Name Total Marks/ Marks Awarded 30

Signature Grade Equivalent

1|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

Total Points: 30
FINAL PROJECT
BUSI532 – MACROECONOMICS

PROJECT GUIDELINES
1. Students should group themselves with a maximum of 5 individuals in a group.
2. No individual Projects are allowed at any circumstances
3. Submit your work on or before the deadline.
4. Record your presentation where each member presenting a part.
5. Corresponding marks will be given to each group.
6. Marks will be rated based on the rubrics attached to this document.
7. Submit your project along with the Turnitin similarity report. This should
not exceed 20%.

PROJECT

T1. Analyze the Following (20 Marks)

1. Explain the tools of monetary policy to control money supply. Take any country

of your choice and state the current monetary policy of that country. (10 Marks)

2. Bring out the impact of fiscal policy on national output. (10 Marks)

3. Present your output in a recording. (10 Marks)

Rubrics for grading of 10 Marks:

40% - Relevance of the content to the lesson discussed.
40% - Clarity of the idea.
20% - spontaneity of the sequence of argument in the discussion of the topic.

Prepared by: Reviewed by: Checked by: Approved by:

R.Stephen Cehellakan Mahmood Ali Akbar JAYENDIRA Vinodh K. Natrajan

Course Cordinatror Programme Head
SANKAR Acting Dean
Date : Date : : Date : : Date : :

2|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

Explain the tools of monetary policy to control money supply. Take

any country of your choice and state the current monetary policy of
that country.

Bahrain is an oil exporting nation in the Middle East. Bahrain does not have capital
restrictions or a fixed exchange rate, unlike the US currency. Because of the country's
reliance on the oil industry, it is regarded to be vulnerable to changes in the price of crude
oil. Because of a rise in oil prices, foreign monies have been flowing into our economy,
which has led to inflation, according to some economists.
The Bahraini central bank has been able to maintain a stable relationship between the
monetary base and the money supply since 1990, based on empirical evidence. The most
recent shocks were no different. There has been no external influence on the monetary
base.

According to empirical evidence, the money multiplier and the monetary base were both
manipulated to maintain steady growth rates.
When a bank's capacity to lend diminishes due to an increase in the necessary reserve
ratio, money supply falls.

Increase in money supply occurs when the needed reserve ratio decreases.

As an example, if the necessary reserve ratio is 20 percent and the money supply is too
high, the Fed will increase the required reserve ratio to 40 percent, decreasing the total
amount of loans a bank may issue from 80 percent to 60 percent, causing the money
supply to drop.

3|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

1. The greater the discount rate, the less likely the banks are to borrow. As a
consequence, there will be less money in circulation.
2. More banks will borrow if the discount rate is dropped, increasing the amount of
money in circulation.

3. Issue government securities to manage the money supply since money flows to
the Fed when banks purchase them.
4. Engaging in open market operations.
5. Increase the money supply by purchasing government bonds to pay for the
increase in the money supply.

Bring out the impact of fiscal policy on national output.

Monetary Policy significantly affects the nationl yield on the nation, climate the public
authority decisied to incease tax assessment on individuals, or incease the costs of the
producs and administrations, which will incease expansion. At the point when expansion
is high then, at that point, loan fee will be high, and that implies that individuals won't
contribute, in light of the fact that the venture rate will be high, when these elements is
high individuals will not however merchandise and servies, this will prompt a
diminishing in the result of a country. Whenever expansion rate is low, then, at that point,
speculation rate will be low which will cause individuals to contribute more, then when
these elements are low individuals will purchase labor and products, this will prompt an
incease in the result of a country.

Money related approach is a critical instrument for managing the economy because of its
ability to impact the total amount of outcome producedthat is, complete public result. The
fundamental impact of a financial improvement is to raise the interest for work and items.
This more conspicuous interest prompts extensions in both outcome and expenses. The

4|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

amount more allure assembles result and expenses depends, in this way, on the state of
the business cycle. In case the economy is struggling, with unused helpful cutoff and
jobless workers, then, developments pursued will lead generally to more outcome without
changing the worth level. In the event that the economy is at full work, then again, a
financial improvement will morely affect costs and less impact on outright outcome.

This limit of monetary way to deal with impact yield by affecting all out interest makes it
a normal gadget for financial change. In a slump, the public authority can run an
expansionary monetary methodology, therefore helping with restoring result to its
average level and to put jobless workers back to work. During an impact, when extension
apparently is a more vital issue than joblessness, the public authority can run a monetary
arrangement overabundance, helping with toning down the economy. Such a
countercyclical technique would provoke a monetary arrangement that was changed in
light of everything.

Modified stabilizersprograms that normally expand monetary game plan during slumps
and understanding it during boomsare one sort of countercyclical money related
procedure. Joblessness security, on which the public authority spends extra during slumps
(when the joblessness rate is high), is an outline of a customized stabilizer. Furthermore,
considering the way that costs are by and large comparative with wages and advantages,
the proportion of obligations assembled is higher during an impact than during a slump.
Thusly, the obligation code similarly goes probably as a customized stabilizer.

Regardless, monetary course of action need not be customized to accept a settling part in
business cycles. A couple of monetary specialists propose changes in money related
approach considering financial conditionsso-called discretionary financial policyas a
strategy for coordinating business cycle swings. These thoughts are generally customarily

5|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

heard during slumps, when there are calls for tax cuts or new spending undertakings to
get the economy rolling again.

Shockingly, discretionary monetary methodology is now and again prepared to finish its
assurance. Money related approach is especially difficult to use for change considering
inside lagthe opening between when the necessity for monetary system arises and when
the president and Congress complete it. If business experts figure well, then, the leeway
wouldn't have any effect since they could tell Congress the appropriate money related
plan somewhat early. In any case, monetary experts don't appraise well. Missing exact
guesses, tries to use discretionary financial plan to adjust business cycle instabilities are
as inclined to do hurt as incredible. The case for using discretionary monetary way to deal
with balance out business cycles is also incapacitated by the way that another gadget,
cash related plan, is certainly more deft than financial system.

Whether or not really for extraordinary or for debilitated, monetary policys ability to
impact the level of result through all out interest wears off over an extended time. Higher
complete interest due to a monetary improvement, for example, in the end shows up in
more excessive expenses and doesn't assemble yield using any and all means. That is
because, over the long haul, the level of still hanging out there not according to popular
demand but instead by the reserve of factors of creation (capital, work, and
advancement). These components of creation conclude a trademark speed of result
around which business cycles and macroeconomic methodologies can cause simply
ephemeral instabilities. An undertaking to keep yield over its customary rate through
absolute revenue approaches will lead just to consistently accelerating extension.

6|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

The way that outcome returns to its normal rate for a really long time isn't the completion
of the story, regardless. As well as moving outcome in the short run, expansionary
monetary methodology can change the normal rate, and, it just so happens, the since quite
a while in the past run effects of financial augmentation will frequently be an opposite
thing to the short-run impacts. Expansionary monetary course of action will incite higher
outcome today, yet will cut down the ordinary speed of result underneath what it would
have been later on. Basically, contractionary financial course of action, but hosing the
outcome level in the short run, will provoke higher outcome later on.

Because it affects the country's saving rate, a financial growth has long-term effects on
the outcome level. Individuals and organisations contribute to the country's total savings,
while the federal government contributes to the total savings (which is just about as old
as spending plan abundance). A decrease in government savings is part of a monetary
augmentation. As a result, the nation will either invest less in new plants and equipment
or increase the amount of aggregate it receives from overseas, both of which lead to
undesirable consequences. If a country's theory is weaker, its capital stock and its
capacity to generate returns will suffer. If a nation has a long-term commitment to
pariahs, it implies that a larger portion of its future results should be exported to another
country rather than consumed domestically.

Financial technique also alters the weight of future evaluations. With an expansionary
financial system, the public power increases its commitments. Expansionary monetary
methods now are putting an extra burden of debt on future inhabitants since they must
pay interest on this promise (or repay it) over the next many years. Public authorities may
also utilise floods or shortfalls as a way to shift remuneration across various age groups,
just as they might use expenses.

7|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

That this influence on future assessments will cause purchasers to adjust their savings
habits has been argued by a few financial gurus. To avoid paying more taxes in the
future, individuals are said to be saving up the value of a tax cut they get now in order to
do so later. According to Ricardian balance, a limitation on this debate, fee cuts will not
influence public saving since changes in private saving will precisely counterbalance
increases in government saving. So if these financial experts were correct, I would be
wrong in stating that private enterprise is plagued by spending plan problems. The
Ricardian equity model will not hold if customers opt to give a part of the increased
money they get from a tax reduction (because they are astigmatic about future obligation
portions, for example) since an assessment drop will reduce open saving and boost
absolute revenue. Ricardian indistinguishability is often overlooked by business analysts,
who fail to see how customers react to unexpected problems.

All our interest and savings are affected by financial methods, but so is the economy's
ability to go forward. Disturbing a development has the effect of crippling the activity in
general. High fringe costs on wages depress social class motivation to get a higher wage. '
The public authority may increase yield by lowering the amount of assessment
assortment or even by maintaining a level that is nearly same while cutting immaterial
cost rates and limiting permissible inductions. Supply-side monetary experts argue that
lower control rates have a significant impact on the amount of work done and hence on
the yield (see supply-side monetary issues). Charges' inspiring power effects also include
a segment on the interest side. Plans, such as lowering the hypothesis charge, may have a
significant impact on the interest rate for capital products.

Monetary policy's capacity to fix short-term instabilities and its long-term influence on
production have been hindered by the fact that changes in financial method are
fundamentally packaged with a variety of other adjustments that either delight or annoy
8|Page
 College of Administrative and Financial Sciences
2nd Tri, SY 2021-2022
Final Project

many friends. Congressman X's district has a road that will be bundled as part of a
countercyclical money-related approach when it is built. Even with a little tax decrease,
the difference is significant. Typically, this leads to an institutional desire for
expansionary activity during slumps that isn't accompanied by a desire for contractionary
action during impacts. In addition, the advantages of expansionary procedures are felt
immediately, but their costs—increased future commitments and poorer economic growth
—are deferred until a later period. Despite these roadblocks, the problem of carrying out
exceptional monetary procedures remains a political one, according to the final analysis.

9|Page