Macroeconomics

Question 1

What are the 4 macroeconomic objectives

Answer 1

-economic growth
-low and stable inflation
-low unemployment
-balance of payments - manage the deficit

Question 2

How does an economy grow

Answer 2

Increase output

Question 3

2 ways to increase output and how do you do it

Answer 3

-increase supply - supply side polices
-increase demand - increase features of aggregate demand

Question 4

What are the 3 policies to boost economic growth

Answer 4

-fiscal
-monetary
-supply-side

Question 5

What is aggregate demand made up of

Answer 5

-consumer spending
-investments
-government spending
-exports - imports

Question 6

What is fiscal policy

Answer 6

Government lowering taxes and borrowing money to spend on economy

Question 7

What is monetary policy

Answer 7

Changing interest rates to affect consumer borrowing and savings

Question 8

What’s the aim of contractionary monetary policy

Answer 8

-increase interest rate to increase consumer borrowing and reduce saving
-higher interest rates can also increase exchange rates and reduce prices of imported products

Question 9

What is the aim of expansionary monetary policy

Answer 9

-reduce interest rates to increase consumer borrowing and reduce saving
-lower interest rates can also reduce the exchange rates and reduce prices of exported products