E4

Question 1

Fiscal policy

Answer 1

A policy that uses taxation and government spending to achieve its objectives

Question 2

Balanced budget

Answer 2

Government spending =tax revenue

Question 3

Budget deficit

Answer 3

Government spending is more than tax revenue

Question 4

Multiplier effect

Answer 4

An original change in incomes in the economy leads to to a total change in incomes which is a multiple of the original

Question 5

Balance of payments

Answer 5

Difference in total value between payments into and out of a country over a period of time

Question 6

Monetary policy

Answer 6

A policy aimed at affecting the total supply of money in the economy

Question 7

Interest rate policy

Answer 7

The use of interest rates to achieve government objectives

Question 8

Bank rate

Answer 8

The interest rate set by the bank of England which affects all interest rates in the economy

Question 9

Supply side policies

Answer 9

Policies that increase the ability of the economy to supply more goods and services

Question 10

Money

Answer 10

Anything generally acceptable as a medium of an exchange

Question 11

Interest rates

Answer 11

Reward for saving and the cost of borrowing