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Uk Policy

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ECONOMIC ESSAY The Economy of the United Kingdom
Tran Duc Trung
CDLYMY
tranductrung2291@gmail.com

TABLE OF CONTENTS
Economic Policy of the UK………………………………………………….
1.Introduction 2

2.Main (a) Overview of the UK economic 2 (b) Monetary policy and Fiscal Policy 3 (c) The purpose of Fiscal Policy 5 (d) Monetary Policy – Reflation and Deflation 10 (e) Policy of UK in 2011 12

3. Conclusion 16

4. References 17

1. Introduction.
Unfortunately, UK entered its worst recession since World War 2 in 2008. However the UK economy grew by 1.2 per cent in the second quarter of 2010 and 0.8 per cent in the third, the fastest consecutive growth in over 10 years, accelerating from the 0.4 per cent growth recorded in the first quarter of 2010 and 0.4 per cent growth in fourth quarter of 2009.The U.K. economy has grown 2.8% since the end of the recession; the UK economy has recovered twice as fast as expected so far. The UK is currently ranked fourth in the world (and first in Europe) in the World Bank's Ease of Doing Business Index. In the third quarter of 2010 the trade deficit in real terms decreased to £9.7 billion from £10.9 billion. Exports of goods and services rose 2.2 percent whilst imports rose 0.7 percent. The GDP implied deflator rose by 3.0 percent compared with the third quarter of 2009. Compensation of employees at current prices rose by 0.3 percent in the latest quarter and is 2.9 per cent higher than the third quarter of 2009. Total gross operating surplus of corporations rose by 7.3 percent and is 6.1 percent higher than the same period last year. Historically in the 1950, 60s and 70s the government was keen to use fiscal policy to fine tune the economy. It was felt that the government could ensure full employment by increasing Aggregate Demand (AD) when necessary. During this period it

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