Macroeconomic Aims
True or false: Economic growth can increase unemployment.
False, Economic growth can decrease unemployment.
When the budget is balance, the taxes=?
spending
What is quantitative easing?
To create new money to buy asserts.
What is inflation.
Price overall go up.
True or False: Inflation reduces the purchasing power of money.
True
True or False: Price stability means zero inflation
False. (Typically low, steady inflation, for example:2%.)
What is fiscal policy?
Fiscal policy=how the government uses spending and taxes to reach those five aims.
If the central bank raises the reserve requirement, does the money supply increase or decrease?
Decrease.
What is deflation?
Prices overall go down.
True or False: Fiscal policy is managed by the central bank.
False (Managed by the government)
Do you know how to define price stability?
The inflation rate remains at 2%.
What is the meaning of sharing wealth?
Richer people pay higher rates.
Monetary policy decided by:
Central bank
What term describes a general rise in prices across an economy?
Inflation.
True or False: Price stability means zero inflation.
False.
Using taxes and ______, governments move money from richer people to poorer people.
benefits
Why governments tax?
Raise revenue for services, share wealth, discourage bad goods, protect local firms and control demand.
Name the three main monetary policy tools.
Interest rates, open-market operation, reserve requirements & guidance etc.
Name the type of inflation caused by rising production costs.
Cost-push inflation
Which policy (fiscal or monetary) uses changes in the money supply?
Monetary policy.
The labour force=?
people working+people looking for work.
Please lists all types of taxes.
Direct taxes, indirect taxes, progressive taxes, proportional taxes and regressive taxes.
What is reserve requirements & guidance?
Telling banks how much cash they must keep or encouraging them to lend more.
The meaning of disinflation is...
(not deflation!!!):
the rate of inflation slow down
Name one similarity between fiscal and monetary policy.
Both aim to stabilize the economy.