4.5.4 macroeconomic policies in a global context Flashcards
What are automatic stabilisers ?
a fiscal policy formulation that is designed as an immediate response to fluctuations in the economic activity of a certain country
What is meant by discretionary Fiscal policy?
Discretionary fiscal policy means the government make changes to tax rates and or levels of government spending.
What is meant by monetary policy?
Monetary policy is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate, demand side policy
What are supply-side policies?
supply-side policies are government economic policies aimed at making industries and markets operate better and more efficiently
What are the effects of supply-side policy?
- better efficiency
- improved technology and infrastructure
What is meant by direct controls?
a control that is directly imposed upon the manufacturing, pricing, and distribution of specific goods
What is maximum price controls?
When government set a maximum price that a firm cannot charge above
What is minimum guaranteed prices?
A minimum price contract is a forward contract which guarantees the seller a minimum price at delivery.
what is wage controls?
A government regulation limiting the percentage (or, rarely, the dollar amount) by which a wage or salary can increase in a given year
What are external shocks?
An external shock is an unpredictable event that originates outside an economy but is expected to impact it in a significant and visible way.
What are global economies?
the economies of the world’s individual countries considered together as a single economic system.
What are benefits of global company?
- free trade
- movement of labour
- increased economies of scale
- increased investment
What are the deficits of global company?
- currency exchange
- cultural barriers
- regulations
What is transfer pricing?
Transfer pricing is a method of pricing goods and services transferred within a multinational or trans-national company in order to reduce tax burdens and maximise profits.
Why might transfer pricing might be considered undesirable?
- complicated process
- animosity between departments
- departments are compelled to buy other departments of company even though there are better substitutes.
