Macro O Assignment Example | Topics and Well Written Essays - 750 words

Macro O - designation ExampleThe impressive employment and inflation figures in Germany may be attributed to expert economic policies that the estate has held over the years. For instance, by reducing public outlay and ensuring high standards of accountability in the brasss system, Germany was able to withstand the turbulent effects of the European debt crisis that moved(p) some European countries, though the debt crises affected other Eurozone members leading to the current inflation rate in Germany. The body politic has the Euro as its main cash though undervalued compared to Deutschmarks real value. Moreover, Germany is one of the countries that have managed to raise the working hour flexibleness and reduction in structural unemployment. These factors have been critical in sustaining Germanys economy, leading to a sound cheat market that translates in a low unemployment rate. Strong fiscal policies in public spending and deficit turf outs have led Germany to reduce its d ebt burdens, a significant step towards controlling its inflation rates. However, Germanys unemployment rate may be blamed on its transition system of education that holds many youths in vocational schools, which hardly translate to real job opportunities. Such transition schools do not spree skills that are relevant in the market, with graduates from these centres failing to secure jobs. One way to reduce the unemployment rate is to great deal with policies that would encourage Foreign Direct investments, FDIs. Currently, FDI in Germany stands at $40.4 billion (Heritage Foundation, 2013). This is not enough for a country with a sound economy and better export terms than its Eurozone members are. By attracting FDIs, more economic activities bequeath spur across the country, suggesting more employment and reduced inflation rates. 2. German fiscal policies are knowing with a view to reduce unemployment levels and prevent any recessionary forces in the economy. For instance, in 201 0, the presidency had to cut more than 14 million euros in taxes in 2011, the government agreed to cut another 24 million in income taxes (Stifftung, 2013). The benefit of tax cuts as a fiscal policy in Germany was that the government managed to close a significant recession gap. The result was stimulated economic growth through advance consumption. Furthermore, the economy had a better chance to readjust while the government concentrates more in job creation. This explains why Germany has a stable economy considering the low taxation and increased employment opportunities. However, the disadvantage was that the government through these tax cuts reduced its budgetary allocations to important sectors in the development of the country. The country could have funded sociable development projects with the huge amounts of taxes forfeited in tax cuts. The European Central Bank is mainly creditworthy for Germanys monetary policies (Stifftung, 2013). When the bank raises engross rates to curb rising inflation rates, the result is a change in the cost of living considering commodities will have unstable prices as a reaction to the interest rates increase. Most Germans would have to save rather than spend, faced increased costs of acceptation that hampered developments and higher interests rates for government debts. The increase would have a negative effect on both(prenominal) the government and Germans in general and may have slowed down development. However, such an increase in interest rates