Macro Evaluation points Flashcards
What is an evaluation point? (1-4)
1) Depends on state of economy - Job security/ full capacity
2) Time lags - Interest rates 2 years
3) Depend on other variable in the economy
4) Significance of factors. Fall in exports to the US is only small. Recession in Europe more significant
What are other evaluation points? (5-7)
5) Automatic stabilisers - progressive tax and social welfare may mitigate the impact of pro cyclical tendencies
6) Consider impact on all macroeconomic objectives
7) Consider supply and demand side - fiscal policy can reduce demand however it’ll be ineffective to solving supply side unemployment.
Lastly, some more? (8-9)
8) Who benefits? All policies have winners and losers, profit vs people, savers vs debtors.
9) Opportunity cost of funding government spending with borrow vs tax.
