2.6.4 Conflicts between trade offs and policies Flashcards
1
Q
How might the objective of growth conflict with the objective of inflation?
A
high growth = high rise of inflation
2
Q
How might the objective of growth conflict with the objective of a balanced current account?
A
high growth = increased consumption of imports = deficit
3
Q
How might the objective of growth conflict with the objective of a balanced budget?
A
if growth is low, they would stimulate it with a reduction of taxes which means less revenue for government
4
Q
How might the objective of growth conflict with the objective of environmental sustainability?
A
high growth = high pollution
5
Q
How might expansionary fiscal policy affect the interest rate?
A
decrease tax = more people spend = higher interest rates
