4.5.4 Macroeconomic policies in a global context

Question 1

Use of policies

Answer 1

Governments can use ​fiscal policy, monetary policy, supply side policy, exchange rate policy and direct controls in order to achieve a number of goals.
- Direct controls include minimum or maximum prices/wages, quotas on imports, limits on currency or regulation e.g. maximum interest rates.

Question 2

Macroeconomic policies

Answer 2

• Reduce fiscal deficits and national debts
• Reducing poverty and inequality
• Changes in interest rate and supply of money

Question 3

International competitiveness

Question 4

External shocks

Question 5

External shocks - Synoptic point **

Answer 5

The government may need to respond to microeconomic shocks, such as commodity price shock, which would have effects on the whole economy.

Question 6

Transnational companies