Differentiating economic Policies Flashcards
1
Q
Fiscal Policy
A
- Changes in government spending
- Changes in Taxation
2
Q
Monetary Policy
A
- Changes in the Money supply
- Changes in the national interest Rate
3
Q
Supply side polices
A
- Increase incentives to work efficiently
- Promoting Competition
- improving workers skills
- improving infrastructure
- taxes on income
- regulate Unemployment benefits
- subsidise workers for overtime work
- taxes on profits
- research and development
4
Q
Austerity Policies
A
- Aiming for a budget surplus
- Government spending down
- taxes up
5
Q
Expansionary fiscal policy
applied in depression or recession
A
- increased government spending
- decreased taxation
—> Multiplier effect
6
Q
Contractionary fiscal policy
applied in Boom or Recovery
A
- decreased Government spending
- increased taxation
—> decrease inflation by lowering AD
7
Q
Expansionary Monetary policy
applied in a Recession or Depression
A
- Reduced interest Rates
—> less saving and more borrowing
—> increase in AD
8
Q
Contractionary Monetary policy
applied in a Boom or Recovery
A
- Increased interest Rates
—> more saving, less borrowing / spending
—> decreases AD and lowers consumer spending
