Chapter 6: macroecons shit

Question 1

Limitations of increasing investment expenditure

Answer 1

FIrms may be unwilling to invest depending on economic outlook
Structural unemployment

Question 2

Limitations of increasing Government expenditure

Answer 2

Fall in expenditure in other areas

Crowding out effect

Question 3

Limitation of increasing Export / import expenditure

Answer 3

price of imported inputs increases → COP rises → SRAS falls → GPL rises → trade-off against price stability objective → not a sustainable LR policy to pursue

Question 4

Increase SRAS e

Answer 4

lower cost of production increase profitability attract FDI

Question 5

Cost of increase AD

Answer 5

inflation
inequality as different sectors grow at different rates
environmental cost due to rapid depletion of resrouces

Question 6

how to sustainable growth

Answer 6

Reduce negative externalities such as pollution and waste

Increase investment in green technology

Question 7

how to Inclusive growth

Answer 7

Reduce unemployment

transfer payments

Question 8

effect of inclusive growth

Answer 8

ncrease labour productivity
Increase AD
Increase SOL

Government deficit
Disincentive effect

Question 9

Sustainable growth

Answer 9

a rate of growth that can be maintained without creating other significant economic problems such as depleted resources and environmental problems

Question 10

Inclusive growth

Answer 10

a rate of growth that is sustained over a period of time, is broad-based across economic sectors and creates productive employment opportunities for the majority of the country’s population and benefits every section of society