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Economics - Both Years > (1) Chapter 9 - Macroeconomic Policy > Flashcards

(1) Chapter 9 - Macroeconomic Policy Flashcards

1
Q

What is a POLICY INSTRUMENT

A

A tool used to try achieve a policy objective

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2
Q

What is the BANK OF ENGLAND

A

The central bank in the UK which is in charge of monetary policy

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3
Q

What is INFLATION RATE TARGET and what is the current target

A

CPI inflation target set by the government which has a target of 2%

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4
Q

Define BANK RATE

A

The rate of interest the Bank of England pays to commercial banks on their deposits

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5
Q

Define LIQUIDITY

A

Measures how easily assets can be turned into cash without making a loss

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6
Q

What is MONEY SUPPLY

A

The stock of money in the economy made up of cash and bank deposits

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7
Q

What is CONTRACTIONARY MONETARY POLICY

A

Using higher interest rates to decrease AD

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8
Q

Define EXCHANGE RATE

A

The price of a currency measured in terms of another currency

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9
Q

What is EXPANSIONARY MONETARY POLICY

A

Using lower interest rates to increase AD

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10
Q

What is DEMAND-SIDE FISCAL POLICY

A

Influencing AD through changes of Govt spending, taxation and budget balance

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11
Q

What is DEFICIT FINANCING

A

Deliberately running a budget deficit and borrowing to finance the deficit

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12
Q

What is EXPANSIONARY FISCAL POLICY

A

Using fiscal policy to increase AD

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13
Q

What is CONTRACTIONARY FISCAL POLICY

A

Using fiscal policy to decrease AD

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14
Q

What is DESCRETIONARY FISCAL POLICY

A

Making discrete changes to Govt spending, taxation and budget balance to manage AD

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15
Q

What is SUPPLY-SIDE FISCAL POLICY

A

Used to increase the economy’s ability to produce and supply goods

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16
Q

Define NATIONAL DEBT

A

The total amount of debt accumulated from every year

17
Q

Define PROGRESSIVE TAX

A

As income rises, a larger proportion of income is paid in tax

18
Q

What is PRINCIPLE OF TAX

A

A criterion used for judging whether a tax is good or bad

19
Q

Define PROGRESSIVE TAXATION

A

As income rises a larger proportion of income is paid to the government

20
Q

Define REGRESSIVE TAXATION

A

As income rises a smaller proportion of income is paid to the government

21
Q

Define PROPORTIONAL TAXATION

A

When the proportion of income paid in tax stays the same as income increases

22
Q

Define DIRECT TAX

A

A tax which cannot be shifted for another person to pay. Usually levied on income and wealth

23
Q

Define INDIRECT TAX

A

A tax that can be shifted for another person to pay. Usually levied on spending

24
Q

Define SUPPLY-SIDE POLICIES

A

Aim to improve national economic performance by creating competitive and more efficient markets

25
Q

What is SUPPLY-SIDE ECONOMICS

A

Believing that the government should be used to improve the competitiveness and efficiency of markets

26
Q

Define INTERVENTIONALIST POLICIES

A

Governments interfering with market. They could fund research and development

27
Q

Define NON-INTERVENTIONALIST SUPPLY-SIDE POLICIES

A

Free up markets promoting competition

28
Q

Define PRIVITISATION

A

Shifting the ownership of state-owned assets to the private sector

29
Q

Define MARKETISATION/COMMERCIALISATION

A

Shifting provision of goods/services from non-market sector to market sector

30
Q

Define DEREGULATION

A

Removing previously imposed regulations

31
Q

What is SUPPLY-SIDE IMPROVEMENT

A

Undertaken by the private sector to reduce cost to enable firms to become more productively efficient

32
Q

Order these from most liquid to least:

  • Bank saving accounts
  • Shares, bonds and bills
  • Notes and coins
  • Building society accounts
  • Banking current account
A
  1. Notes and coins
  2. Bank current accounts
  3. Banking saving account
  4. Building society accounts
  5. Shares, bonds and bills
33
Q

Define NARROW MONEY

A

Notes, coins and current accounts (immediate accessible)

34
Q

Define BROAD MONEY

A

Narrow money + financial assets (not immediately accessible)

35
Q

Define MONEY MARKETS

A

Short-term loans to individuals, firms and government

36
Q

Define CAPITAL MARKETS

A

Mid-Longterm trades of bonds and shares to firms and government

37
Q

What is the FOREIGN EXCHANGE MARKET

A

Trade between different currencies

38
Q

What is the difference between the SPOT MARKET and the FORWARD MARKET

A

Spot market - Immediate conversion

Forward market - Agreement to buy at a later date

39
Q

What are TREASURY BILLS

A

Short-term debts borrowed by the government usually repaid within 3 months

Economics - Both Years (13 decks)

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