macro obj

Question 1

macro-economic objectives

Answer 1

objectives outlining how gov aim to max level of national outcome, providing Econ growth to raise utility and living standards of the population

Question 2

macro-economic policies

Answer 2

tools utilised by gov and central bank to achieve macro economic objectives, namely monetary policy, fiscal policy and supply-side policies

Question 3

stable and sustianbkle econ growth

Answer 3

over last few months Econ growth stopped and been stable. last few months 0
caused by lots of uncertainty in world

Question 4

low and stable inflation

Answer 4

last 3 years inflation gone up to 12%
now around 2.6% but concerns
target = 2% will create uncertainty

Question 5

balance of payments equilibrium

Answer 5

uk balance of payments tend to be negative
sports - imports

Question 6

balanced budget deficits

Answer 6

gov taation and ependiture
last surplus = 25 years ago
uk has neg deficit

Question 7

income equality

Answer 7

gap between rich + poor has increased - massive gap - esp during covid years

Question 8

monetary policy

Answer 8

manipulation of the economy using monetary variables using interest rates and control of money supply

Question 9

how monetary policy works

Answer 9

Bank of England study inflationary trends in economy , looks at - unemployment, consumer confidence, spare capacity, exchange rate index, house prices, Econ growth

Question 10

forward guidance

Answer 10

communicate planned changes in monetary policy

Question 11

adv monetary policy

Answer 11

• interest rates have direct, powerful effect on household spending, suggests UK consumers high interest rate elastic
• monetary policy committee is independent from goc , can make free decisions
• interest rates can be adjusted on monthly basis
• immediate effect on confidence

Question 12

limitations monetary

Answer 12

• liquidity trap - interest rates fail to stimulate economic activity
• difficult to control many obj with one tool-interst rates
• changing interest rates affect exchange rate
• affect some parts of economy more than others
  -time lags

Question 13

fiscal policy

Answer 13

use of taxes, gov spending and gov borrowing by gov to achieve its objective

Question 14

purpose fiscal

Answer 14

stimulate Econ growth, keep inflation low, stabilise Econ growth, avoid boom and bust cycle

Question 15

automatic stabilisers

Answer 15

type of fiscal policy designed to offset fluctuations in economic activity through their normal operation without additional authorisation by gov

Question 16

discretional fiscal policy

Answer 16

fiscal policy that refers to gov decisions that alter gov spending or taxation

Question 17

adv fiscal policy

Answer 17

-public spending has big impact on AD level, compensate for fallings in other AD components
- if spending on capital items, infrastructure can be improved, can help improve Econ growth
- spending on infrastructure = eternal benefit for rest of economy
-public spending can be targeted to achieve range of Econ objectives

Question 18

limitations of fiscal

Answer 18

• considerable time lag btw spending and benefits of spending
• trying to promote growth/create jobs = inflationary
• potential ‘trade-off’ between unemployment and inflation
• won’t increase AD