Multiple choice question corrections Flashcards
A fall in the exchange rate
Depreciation in the exchange rate means a more expensive import and cheaper export (Increased net exports)
A rise in the exchange rate
Appreciation in the exchange rate means a cheaper import and more expensive exports (Increased net exports)
Multiplier formula
National income/Initial investment
What are supply side policies
The attempt to increase productivity and efficiency. Aims to create long term economic growth
What is fiscal policy
Influencing economic activity by manipulating government spending and/or tax rates (to change tax revenue received)
What is monetary policy?
The way a central bank or government can control money supply or an interest rate.
What do direct taxes affect?
Aggregate demand (Lower direct taxes increases aggregate demand)
What to go over?
Inflation
The economic cycle
