Introduction To Macroeconomic Policy

Question 1

Balance of payments

Answer 1

A measure of the difference between money flows in and out of the economy

Question 2

Directs taxation

Answer 2

An amount of money that is paid to the government by the individual or firm themselves. It cannot be avoided or shifted to another person/ organisation

Question 3

Taxation

Answer 3

Government charges to people and businesses

Question 4

Exchange rate policy

Answer 4

Governments decision to manipulate the exchange rate or to leave it to be determines by market forces

Question 5

Economic growth

Answer 5

Increase in GDP over some period of time

Question 6

National debt

Answer 6

Money owned by the state to its creditors

Question 7

Fiscal policy

Answer 7

Policy which involve a reduction in government expenditure and an increase in taxation to reduce the governments debt, as well as controlling AD

Question 8

Expansionary policy

Answer 8

Macroeconomic strategies that seek to stimulate economic growth within the economy

Question 9

Contractionary policy

Answer 9

Macroeconomic strategies that seek to reduce economic activity in the economy to avoid overheating

Question 10

Monetary policy

Answer 10

Strategy used by government or central bank to influence the economy buy influencing cost or supply of money

Includes quantitive easing or interest rates

Question 11

Supply-side policies

Answer 11

Stratergies which the government undertakes that have the aim of shifting the LRAS to the right

Question 12

Government spending

Answer 12

The amount of money that is spent on a countries behalf

Question 13

Interest rate

Answer 13

The amount paid by borrowers to the lender

Question 14

Deregulation

Answer 14

Removal of government laws and restrictions acting as a barrier to trade and business- the aim of increasing competition and efficiency

Question 15

Austerity

Answer 15

The use of taxation and public spending by the government to influence an economy