Module 20 - Demand-side macroeconomic policy Flashcards
Fiscal policy
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Budget deficit, budget surplus and fiscal stance
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Current and capital expenditure
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Final expenditure and transfers
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Public sector net borrowing (PSNB)
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Public sector net cash requirement (PSNCR)
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Structural deficit or surplus
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Current budget position
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Discretionary fiscal policy
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Fine-tuning policy
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Pure fiscal expansion
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Crowding out
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Current budget balance
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Distinguish between automatic fiscal stabilisers and discretionary fiscal policy
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Explain how fiscal policy can be used to manage aggregate demand
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Outline the practical problems of using fiscal policy
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Explain the long-term problems of persistent budget deficits
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Give examples of fiscal rules
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Discuss the ways in which fiscal policy in the UK has changed (the fiscal policy yo-yo) in the period 2008-2015
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Monetary policy
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Minimum reserve ratio
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Financial crowding out
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Funding
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Liquidity map
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Outline the goals of monetary policy
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Outline two ways in which the money supply can be controlled in the medium and long term
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Outline three categories of short-term monetary measures
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Explain four techniques that can be used to control the money supply
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Explain why it may be difficult to control the money supply
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Explain how the central bank can control interest rates
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Discuss the problems of using interest rates to control credit
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Discuss the effectiveness of monetary policy in influencing the level of aggregate demand
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State the reasons for making the Bank of England independent
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Outline how the Bank of England’s inflation target operates
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Outline the main features of monetary policy in the UK in recent years
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Constrained discretion
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Goodhart’s Law
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Taylor Rule
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Discuss the relative merits of discretionary demand-management policy
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Discuss the relative merits of a rules-based approach used in the UK
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Discuss the extend to which a rules-based approach is used in the UK
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Outline how supply-side policies can be used to influence the main macroeconomic objectives (economic growth, unemployment, inflation and the balance of payments)
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Give examples to illustrate the links between demand-side policy and supply-side policy
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