Macroeconomic Aims
Which macroeconomic aim does GDP growth primarily reflect?
Economic growth
What are the two main tools of fiscal policy?
Taxation and government spending
What’s central bank’s key monetary tool?
Interest rate adjustment
Hyperinflation CPI threshold?
50% monthly
Which macroeconomic aim is affected by rising unemployment?
Full employment
What type of fiscal policy is increasing infrastructure investment?
Expansionary fiscal policy
How does lowering reserve requirements affect money supply?
Increases money supply
Example of cost-push inflation?
Oil crisis
If a country's trade deficit widens, which aim is challenged?
Balance of payments
What fiscal measures should be taken during economic overheating?
reduce spending
What assets for QE？
Government bonds
Policy differences: demand-pull vs cost-push?
Demand: Tightening
Cost: Supply reforms
What conflict arises when targeting both inflation and unemployment?
a decrease in unemployment is often accompanied by a rise in inflation as increased demand from more employed workers pushes up prices
How do automatic stabilizers work in fiscal policy?
Unemployment benefits
How does Taylor Rule guide rates?
Adjust rates based on inflation gap and output gap
How does deflationary spiral form?
Price drop→Profit decline→Layoffs→Demand fall
Analyze why price stability may conflict with economic growth.
Expansionary policies raise inflation/Contractionary policies limit growth
Compare COVID-19 fiscal stimuli in China and the US？
China: Targeted infrastructure investment US: Universal cash grants
Why did BOJ adjust YCC in 2023?
Addressing inflation pressure
Why fear deflation more than mild inflation?
Increases debt