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Question 1

what are the strengths and limitations of monetary policy

Answer 1

strengths
- speed (cash rate is applied immediately)
- direct impact on saving and spending decisions

limitations
- short term impacts
- global influences (international interest rates)
- if cash rate is already low there is little room
- time lags

Question 2

what are the strengths and limitations of fiscal policy

Answer 2

strengths
- specific (education, healthcare)
- longer term effects
- direct impact on AD

limitations
- time lag (recognition, decision making, implementation)
- political constraints (backlash from increasing taxes)
- exogenous factors (global economic conditions)

Question 3

what are the strengths and limitations of microeconomic reform

Answer 3

strengths
- long term impacts

limitations
- time lag (may take years to see effects)

Question 4

what does a CAD mean in terms of imports and exports

Answer 4

imports are bigger than exports