Economics Essay Example | Topics and Well Written Essays - 1000 words - 5

Economics - Essay Example An economic cycle comprises several phases viz. recession, recovery and boom. In the recovery phase, individuals and businesses borrow and invest more causing the aggregate demand to rise up which leads to boom or expansionary pressures in the economy. This boom brings with it problems like inflation and high imports etc. In such a situation, the government needs to take some action through various macroeconomic policies for the purpose of stabilisation of economy. Thus, the recessionary pressures enter the economy characterised by weak investment and business slow down (Smith, 2003). The economy displays several peaks and troughs over a cyclical phase (see Fig 1). The responsibility of government to stabilise the economy leads it to make use of various macroeconomic policies in order to manage the cyclical economic fluctuations. As an advisor to the government, I would like to recommend the use of monetary and fiscal policies for the purpose of curtailing cyclical fluctuations. Macroeconomic policies like monetary and fiscal policies can be utilised by government to control economic fluctuations. Macroeconomic factors like taxation and government spending fall within the realm of fiscal policy whereas inflation, interest rates, exchange rates and other monetary factors are relevant to the monetary policy. Government can control economy by fluctuating interest rates, exchange rates, and the growth of money and credit in the economy (Smith, 2003). Most particularly, changing interest rates on the part of the government affects inflation, supply of money and credit, exchange rates, foreign and domestic investment and business expansions etc. All these factors put a great impact on the cyclical pressures in the economy. Monetary policy can be utilised in two dimensions under cyclical fluctuations in business. In the case of expansionary pressures or boom in the economy, the

Executive Remuneration Principles and practice Coursework

Executive Remuneration Principles and practice - Coursework Example There was a big financial crisis in 2007. The remuneration practices for the executives in large financial institutions and industrial firms played a large role in that crisis.1 The main slogan of these debates was "there should be a fair compensation". The meaning of this line can be implied in the following ways 2 : For gaining a big profit, the managers or the agents interest does not necessarily match with that of the shareholders.3 They run the show according to their convenience and satisfaction, even if that hurts the shareholders sentiments. This can cost the firm to lose a strategically important acquisitions offers and even a takeover decision as well. This might increase the value of the shareholders but the position of the managers will be at stake. If we look into the matter in this aspect, then a fair remuneration is that which is given as per the market condition and value. This should be decided by a healthy negotiation. The second important factor in this regard is disclosure or precisely a better transparency.4 This is also important as far as the accounting is concerned. This acts as an important monitoring tool that deals with the fairness of remuneration. This is beneficial for the company as well as the market authority and the stakeholders that help them put forward a stren uous auditing activity. The people who are in charge of remuneration decision, decide on the remuneration that may not be a fair one and also it lacks transparency. Improvement of the corporate governance policies makes the task of decision-making easier. Promoting fair regulators, negotiations and also few best practices act as boosters to this step.5 There are chances that new and improved decision steps are being added. The purpose of this is not only limited to the creation of an independent board that has an internal remuneration committee, but also to allow the shareholders to be an important part of the remuneration process.6