Macroeconomic Aims
What is the definition of short-run growth?
making more goods and services each year
What is the fiscal policy?
How the government uses spending and taxes to achieve the macroeconomic aims
What is the monetary policy?
Central bank actions that change how money is in the economy.
What is disinflation?
The rate of inflation slows down.
Is full employment achievable?
No
What is the labour force?
people working + people looking for work
Why do governments spend(Name four reasons)
Boost demand, fix market failures, help the vulnerable, and pay interest
Loans cost more.
What are the three main causes of inflation?
Demand-pull, cost-push, monetary
How do you respond to bad inflation?
Raise interest rates or reduce spending.
Which is better: a small, steady inflation rate or a large, unstable inflation rate?
a small, steady inflation rate
Why do governments tax?
Raise revenue, share wealth, discourage bad goods, protect local firms, and control demand.
What does narrow money supply include?
cash+bank current accounts
What are some of the good effects of inflation?
Encourages firms to invest, reduces the real burden of debts, etc.
How do you respond to bad deflation?
Cut interest rates, spend more, or reduce taxes.
What does the government use to move money from rich people to poorer people?
They use tax and benifits
How many types of taxes are there?
5
Why does the monetary policy matter?
Changes affect household spending, business investment, and even exchange rates.
Why is slow, steady inflation good?
It encourages firms to sell and increase demand.
What does "economic growth" mean?
An increase in the production of goods and services in an economy over time.
Why should the government make the earnings of exports match the spendings on imports? (Hint: long-term)
Long-term surpluses mean people could've enjoyed more imports and long-term deficits lead to debt
Name all the types of taxes.
Direct, indirect, progressive, proportional, and regressive.
Name the four key tools of the monetary policy.
Interest rates, open-market operations, reserve requirements and guidance, quantitative easing.
Where does good inflation come from?
Better technology or productivity.
What is the effect of budget deficits?
The government borrows more money.