economics

Question 1

The rate of inflation has increased by 6.8% over the last year. The U.S. Government wonders what it can do to help improve this situation.

a. Should the government use Fiscal or Monetary policies?

Question 2

The rate of inflation has increased by 6.8% over the last year. The U.S. Government wonders what it can do to help improve this situation.

b. What action would this policy involve?

Question 3

The economy has slowed over the last three months. The President discusses this with his advisors and they discuss what policy changes they could make that would help to improve the situation.

a. Should the government use Fiscal or Monetary policies?

Question 4

The economy has slowed over the last three months. The President discusses this with his advisors and they discuss what policy changes they could make that would help to improve the situation.

b. What action would this policy involve?

Question 5

The Gross Domestic Product (GDP) in the U.S. has increased over the last six months. The President meets with his advisors and they discuss what policy changes they could make that would help to improve the situation.

a. Should the government use Fiscal or Monetary policies?

Question 6

The Gross Domestic Product (GDP) in the U.S. has increased over the last six months. The President meets with his advisors and they discuss what policy changes they could make that would help to improve the situation.

b. What action would this policy involve?

Question 7

reasons why there is such a large differnce between wealth and income

Answer 7

• Access: High-income earners often have access to better education, healthcare, and job opportunities, which can perpetuate the cycle of inequality.
• Debt: Carrying debt can trap individuals, populations, or even countries into a cycle of poverty.
• investments: the top 5% of Australians wealth comes from investments such as rent and superannuation which for the lower percentiles is incredibly less or none

Question 8

macroeconomics
- 3 objectives
- 2 targets

Answer 8

• keep the economy growing over time
• limit unemployment
• keep prices stable
• increasing productivity
• controlling inflation ( too high or too low)

Question 9

monetary policy
- who is in charge
- what does it combat
- how does it do it

Answer 9

• the central bank (the Reserve Bank of Australia)
• To stimulate a faltering economy, the central bank will cut interest rates, making it less expensive to borrow while increasing the money supply. If the economy is growing too rapidly, the central bank can implement a tight monetary policy by raising interest rates and removing money from circulation.
• inflation
• expensive goods = GDP
• to combat high inflation it raises inflation rates meaning that people will have less money to spend as they will be spending more on their loans most likely home loans, making demand for goods go down causing business to make their prices cheaper therefore causing inflation to
• to combat low inflation in a recession it lowers inflation rates so that economic growth increases and so too does public spending, business spending and employment rates, boosting the overall economy.

Question 10

Fiscal policy
- who is in charge
- what does it combat
- how does it do it

Answer 10

• government
• determines the way in which the central government earns money through taxation and how it spends money. To stimulate the economy, a government will cut tax rates while increasing its own spending; while to cool down an overheating economy, it will raise taxes and cut back on spending.
• aggregate demand for goods and services,
• employment,
• inflation,
• economic growth.
• lowering taxes to combat recession
• lower tax rates 30% tax for people earning $110 thousand instead of $120 thousand to combat high inflation
• less government spending to cool down the economy and combat high inflation rates

Question 11

business cycle phases and characteristics