Module 20 - Demand-side macroeconomic policy

Question 1

Fiscal policy

Answer 1

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Question 2

Budget deficit, budget surplus and fiscal stance

Answer 2

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Question 3

Current and capital expenditure

Answer 3

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Question 4

Final expenditure and transfers

Answer 4

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Question 5

Public sector net borrowing (PSNB)

Answer 5

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Question 6

Public sector net cash requirement (PSNCR)

Answer 6

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Question 7

Structural deficit or surplus

Answer 7

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Question 8

Current budget position

Answer 8

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Question 9

Discretionary fiscal policy

Answer 9

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Question 10

Fine-tuning policy

Answer 10

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Question 11

Pure fiscal expansion

Answer 11

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Question 12

Crowding out

Answer 12

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Question 13

Current budget balance

Answer 13

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Question 14

Distinguish between automatic fiscal stabilisers and discretionary fiscal policy

Answer 14

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Question 15

Explain how fiscal policy can be used to manage aggregate demand

Answer 15

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Question 16

Outline the practical problems of using fiscal policy

Answer 16

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Question 17

Explain the long-term problems of persistent budget deficits

Answer 17

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Question 18

Give examples of fiscal rules

Answer 18

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Question 19

Discuss the ways in which fiscal policy in the UK has changed (the fiscal policy yo-yo) in the period 2008-2015

Answer 19

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Question 20

Monetary policy

Answer 20

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Question 21

Minimum reserve ratio

Answer 21

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Question 22

Financial crowding out

Answer 22

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Question 23

Funding

Answer 23

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Question 24

Liquidity map

Answer 24

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Question 25

Outline the goals of monetary policy

Answer 25

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Question 26

Outline two ways in which the money supply can be controlled in the medium and long term

Answer 26

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Question 27

Outline three categories of short-term monetary measures

Answer 27

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Question 28

Explain four techniques that can be used to control the money supply

Answer 28

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Question 29

Explain why it may be difficult to control the money supply

Answer 29

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Question 30

Explain how the central bank can control interest rates

Answer 30

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Question 31

Discuss the problems of using interest rates to control credit

Answer 31

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Question 32

Discuss the effectiveness of monetary policy in influencing the level of aggregate demand

Answer 32

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Question 33

State the reasons for making the Bank of England independent

Answer 33

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Question 34

Outline how the Bank of England’s inflation target operates

Answer 34

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Question 35

Outline the main features of monetary policy in the UK in recent years

Answer 35

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Question 36

Constrained discretion

Answer 36

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Question 37

Goodhart’s Law

Answer 37

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Question 38

Taylor Rule

Answer 38

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Question 39

Discuss the relative merits of discretionary demand-management policy

Answer 39

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Question 40

Discuss the relative merits of a rules-based approach used in the UK

Answer 40

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Question 41

Discuss the extend to which a rules-based approach is used in the UK

Answer 41

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Question 42

Outline how supply-side policies can be used to influence the main macroeconomic objectives (economic growth, unemployment, inflation and the balance of payments)

Answer 42

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Question 43

Give examples to illustrate the links between demand-side policy and supply-side policy

Answer 43

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