Macroeconomic Objectives & Policy

Question 1

What are the 6 macroeconomic objectives?

Answer 1

1. Economic growth
2. Low unemployment (3%)
3. Stable inflation (2%)
4. Balance of payments equilibrium
5. Balanced government budget
6. Income equality

Question 2

What are the 2 categories of demand-side policies?

Answer 2

1. Fiscal policy
2. Monetary policy

Question 3

What are the 2 monetary policy instruments?

Answer 3

1. Interest rates
2. Quantitative easing

Question 4

What is quantitative easing?

Answer 4

When the Central Bank creates new money and uses it to buy open-market assets

Question 5

What are the 2 fiscal policy instruments?

Answer 5

1. Taxation
2. Government spending

Question 6

What are 4 examples of expansionary policy?

Answer 6

1. Lowering taxes
2. Lowering interest rates
3. Raising government spending
4. Quantitative easing