Macroeconomic Aims
Why is payment stability important?
It keeps the country's economy working and does not get into debt.
_________ refers to decisions on government spending and taxation taken to influence total demand in the economy.
Fiscal policy
__________ seeks to influence aggregate demand.
Monetary Policy
Name a beneficial effect of inflation.
ex: encourage firms to expand.
What of the following may lead to a inflation?
A. I forgot to wash my hands after pooping.
B. No more materials to make a popular good in a country.
C. Everyone is unable to live.
D. My mom abandoned me again.
B
Whats the purpose of keeping price stability?
To make sure the country's economy would not lose international competitiveness.
A ________ is when the governmenfs spending is higher than its revenue.
budget deficit
Give one similarity between monetary policy and fiscal policy.
ex: they both increase country economy.
a sustained fall in the prices of goods and services.
Why government want everyone to have a job?
Because this makes the country economy keep envolving and developing.
What are the main government aims for the economy?
economic growth, low unemployment, price stability, balance of payments stability, and redistribution of income
What are the principles of taxation?
equity, certainty, convenience, economy, flexibility, efficiency
What decisions does monetary policy covered on?
Money supply, interest rate, exchange rate
Whats the difference between deflation and disinflation?
Disinflation is a fall in inflation and deflation is negative inflation.
A ________ market is one which responds quickly and easily to changes in market conditions
flexible labour
because producing more goods and services can raise people’s living standards
What government may be doing when they are trying to redistribute income from the rich to the poor.
levying taxation
What are the methods of increasing money supply?
to print more money, buy back government bonds or encouraging commercial banks to lend more.
Name one harmful effect of inflation.
True of False: Inflation will cause a rise in the purchasing power of money. Among the other possible harmful effects are an unplanned redistribution of income, menu costs, shoe leather costs, uncertainty and a worsened position of the balance of payments
False.
What kind of people are considered unable to work?
ex: children, retired, home makers etc.
What are the four essensial reasons governments are spending for?
To influence economic activity.
To reduce market failure.
To promote equity.
To pay interest on national debt.
Which of the following might causes a inflation?
A. More people are having children.
B. My mom doesn't want me anymore.
C. Productions are cheaper.
D. People want Chocolates crazily.
D
True or False:Demand-pull inflation is more likely to occur when the economy is at or approaching full employment.
True