Key Economic Objectives

Question 1

Macroeconomic policy objective

Answer 1

Stable low inflation.

Question 2

Macroeconomic policy objective

Answer 2

Sustainable growth.

Question 3

Macroeconomic policy objective

Answer 3

Improvements in productivity.

Question 4

Macroeconomic policy objective

Answer 4

High employment.

Question 5

Macroeconomic policy objective

Answer 5

Rising living standards and a fall in relative poverty.

Question 6

Macroeconomic policy objective

Answer 6

Sound government finances.

Question 7

Monetary policy

Answer 7

Changes to interest rates, the supply of money and credit and changes to the value of the exchange rate.

Question 8

Fiscal policy

Answer 8

Changes to government taxation, gov spending and borrowing to affect the level and growth of aggregate demand, output and jobs.

Also used to change the pattern of spending on goods and services.

Also a way of redistributing income and wealth.

Question 9

Supply-side policies

Answer 9

Aim to make markets and industries operate more efficiently and contribute to a faster underlying rate of growth of real national output.

Question 10

Contractionary fiscal policy

Answer 10

Involves:

• a cut in gov expenditure
• an increase in direct/indirect taxes
• an attempt to reduce the size of the budget deficit.

Question 11

Expansionary fiscal policy

Answer 11

Involves:

• cut in personal income tax rates
• cut in indirect taxes
• cut in corporation tax
• cut in tax on interest from saving.