Macroeconomic Aims
What is the demand?
willingness and ability of consumers to purchase a specific quantity of a good or service at various prices
What is fiscal policy?
Fiscal policy is the use of government spending and taxation to influence the economy.
What is monetary policy?
Monetary policy refers to the actions taken by a central bank
What is inflation?
Inflation is when the overall price of goods and services rises over time, so money buys less than before.
What do economists call the situation where wants are unlimited but resources are limited?
Scarcity
What is inflation?
the increase of overall price in economy over time
During a recession, should the government increase or decrease government spending to stimulate the economy?
increase
When an economy is in a recession, should the central bank increase or decrease interest rates?
decrease interest rates
What’s the difference between inflation and deflation?
If the price of coffee rises, what happens to the demand for tea?
Demand for tea increases
If a country’s government spends more money on roads and schools, how might this affect the country’s economy?
it would create job, and those who have this job will earn money and they will buy things. This can help country's economy to expand
Why might the government cut taxes during a recession?
Cutting taxes gives people and businesses more money to spend or invest.
Why does the central bank care about inflation?
the central bank need to keep the inflation slow and steady
What might cause inflation? Name one common reason.
One common cause of inflation is too much money in the economy.
Which is more dangerous for an economy long-term: mild inflation or deflation?
deflation
What happens to a country’s economy if many people lose their jobs?
It will be a negative cycle and slower economic growth.
If the government wants to help the economy grow, should it increase taxes or build more schools?
build schools
What happens when the central bank cuts interest rates to near zero
people will not save money and use it more
Why is deflation harmful to the economy?
People delay buying things, expecting prices to drop further
During a recession, the government can increase spending or cut taxes to stimulate the economy. What’s a major drawback of both policies?
higher bugdet
The difference of disinflation and deflation
During the COVID-19 pandemic, many governments gave people “stimulus checks” (free money). Was this a fiscal policy? Why?
yes, because gocernment spend money onthis
If inflation is too high, what can the central bank do?
raise interest rates
How might a government or central bank fight high inflation?
Raise interest rates or cut government spending
Why might a country still have a strong economy, when it's imports > exports?
due to high consumer spending