Fiscal and monetary policy L22 Flashcards
1
Q
What is fiscal policy?
A
The government’s decision about spending and taxes
2
Q
What is stabilization policy?
A
Government actions to try to keep output close to its potential level
3
Q
What is the national debt?
A
The stock of outstanding government debt
4
Q
What did the Keynesian revolution establish?
A
That economic policymaking could be used in a counter manner to to minimise GDP fluctuations
5
Q
At low levels of GDP, the budget surplus is:
A
Negative
6
Q
At high levels of GDP, the budget surplus is:
A
Positive
7
Q
Why does stabilisation theory not always work?
A
Governments are sometimes reluctant to increase taxes or cut spending in boom periods
8
Q
What is the main influence on monetary policy?
A
1993-97 inflation targeting policy
