How do the policies affect Government objectives? 2

Monetary Policy- Reduced interest rates.

• A fall in IR causes an increase in consumer spending as mortgages/credit cards are less expensive.
• People will be keener to borrow to fund spending.-people have more DI to spend on spending.
• Consumers will save less as theres a fall in IR, so spending will rise.
• Firms will now invest more as less expensive to borrow, they will also want to save profits less and consumption has also risen.
• A fall in IR reduces the value of £, SO imports are more costly exports are cheaper.
• This all causes AD (total demand) in economy, causing output to grow and economic growth to rise.
•  This increases employment but if too high, AD will rise causing…