Macroeconomic Aims
What is full employment?
This focuses on reducing unemployment.
What are taxes and government spending?
The two main tools of fiscal policy
What are interest rates?
central bank’s main tool for controlling money supply
What is inflation?
Prices rising over time.
What is the C in CPI?
Consumer
What is economic growth?
A constant rise in a country's GDP.
What is expansionary?
the type of policy if the government cuts taxes
What is borrow/spend?
people do this when govn lower interest rates
What is deflation?
Prices falling over time.
If the economy is in a recession, the government might _____ spending.
increase
What is balance of payments stability?
balancing imports and exports
What is increases?
If the government spends more on schools, this happens to demand.
True or False: Selling bonds reduces the money supply
true
What is demand-pull inflation?
Inflation caused by too much demand
When prices rise but wages stay the same, people’s _____ decreases.
demand
What is price stability?
keeping prices from rising too fast.
True or False: Fiscal policy is controlled by the central bank.
False
High inflation might lead the central bank to do what to interest rates?
Raise them
what is the situation that a bread costs $1 today but $2 next year?
Inflation
What is deficit?
when a country imports more than it exports in a trade
What is equitable income distribution?
making sure everyone earns a fair share
What is spent less than it earned?
budget surplus
What is the main goal of monetary policy?
control inflation
What is the function of CPI?
measure inflation
What happens when people save too much during a recession?
Less spending/growth will happen