26) National economic performance

Question 1

What is macroeconomics?

Answer 1

How resource allocation occurs at an individual and market level

Question 2

What are the most widely targeted macroeconomic objectives?

Answer 2

1) Sustainable economic growth
2) Low and stable unemployment
3) Low and stable inflation
4) A balance of payments on the current account that is acceptable (Approx X-M)

Question 3

Does/should the government have any other macroeconomic objectives?

Answer 3

1) An acceptable national budget position
2) Acceptable debt to GDP measure of the “national debt”
3) Reduced inequality
4) Environmental factors

Question 4

What are the main differences between the two main political parties?

Answer 4

Labour seen as the party of reduced inequality, tax redistribution and increased government spending (Keynesian)
Conservatives seen as the party of reduced tax, reduced intervention in markets, free markets (neoclassical)

Question 5

What is monetary policy?

Answer 5

Interest rate manipulation, exchange rate manipulation, quantitative easing. By the boe

Question 6

What is fiscal policy?

Answer 6

Taxation and Government spending