Examine How the Government of That Country Has Adjusted Its Monetary and Fiscal Policy in Response to the World Downturn. Explain the Reasoning Behind These Adjustments.

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The monetary policy is defined as “the actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary policy is maintained through actions such as increasing the interest rate, or changing the amount of money banks need to keep in the vault (bank reserves).” The fiscal policy is “ the use of government spending and taxation to influence the economy. When the government decides on the goods and services it purchases, the transfer payments it distributes, or the taxes it collects, it is engaging in fiscal policy.” The world downturn is defined as “an extended period of international economic downturn. Generally, the International Monetary Fund (IMF) considers a global recession as a period where gross domestic product (GDP) growth is at 3% or less. In addition to that, the IMF looks at declines in real per-capita world GDP along with several global macroeconomic factors before confirming a global recession. “ There are several ways in which the monetary and fiscal policy have changed in Singapore to cope with the world downturn. Although the Singapore’s economic strategy was very efficient the GDP growth have slowed in the last 10 years. Other monetary and financial policy were improving the energy efficiency and offering more support to smaller business and those who need trade financing. On the other hand the post-world downturn outlook for Singapore included the risk of slower global growth. Because of the world downturn the Monetary Authority of Singapore which is Singapore’s central bank (MAS) had to intensify the supervising of the financial system and to properly set it up for this kind of situation. Because the first concern of every country when they face the world downturn is to provide enough liquidity in the

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