Macroeconomic policy objectives

Question 1

What are the six macro-objectives in an economy

Answer 1

1. Sustainable economic growth
2. High employment
   3.Low and stable inflation
3. Broad balance on balance of trade.
4. Sustainable use of environmental resources.
5. Fair distribution of income

Question 2

What is a fiscal policy

Answer 2

Any policy based in changes of government spending or revenue raising.

Question 3

What are the three fiscal policy factors

Answer 3

1.Government spending
2. Taxation
3. Government borrowing or debt repayment.

Question 4

What is a monetary policy

Answer 4

Any policy based on changing the price or quantity of money in circulation

Question 5

What are the three monetary policy factors

Answer 5

1.Interest rates- cost of borrowing money
2.Money supply- quantity of money in circulation.
3.Exchange rates- The price of another country’s currency.

Question 6

What is a supply side policy

Answer 6

Any policy aimed at improving the efficiency or productivity of resources or markets with the objective of increasing total output(AS)