Macroeconomic Pbjectives And Policies

Question 1

What are the 7 macroeconomic objectives

Answer 1

• economic growth
• low unemployment
• keep inflation 1% either side of 2%
• reduce debt
• reduce inequality
• balance the BofP
• protect the environment

Question 2

What are the two demand side policies

Answer 2

Monetary policy

Fiscal policy

Question 3

What are the monetary policy instruments

Answer 3

Interest rates
Credit controls
Quantitative easing

Question 4

What are the fiscal policy instruments?

Answer 4

Government spending

Taxation

Question 5

Distinction between market-based and interventionist methods

Answer 5

Market-based policies limit the intervention of the government and allow the free market to eliminate imbalances. The forces of supply and demand are used.
Interventionist policies rely on the government intervening in the market.

Question 6

What are the strengths of supply side policies

Answer 6

• only policies which can deal with structural unemployment, because the labour market can be directly improved with education and training.
• lower inflation
• Lower unemployment
• improved economic growth
• improved trade and BofP

Question 7

What are the weaknesses of supply side solicies

Answer 7

-There are significant time lags associated with supply-side policies.
-Market-based supply-side policies, such as reducing the rate of tax, could lead to a more unequal distribution of wealth.