Need To Go Over Pt1

Question 1

Progressive Tax

Answer 1

Rate increases as payers income increases

Question 2

Regressive Tax

Answer 2

Rate decreases as payers income increases

Question 3

Supply-side policies

Answer 3

Used to boost aggregate supply
Improve productive capacities
E.g. Education

Question 4

Expansionary Fiscal Policy

Answer 4

Decreasing taxes
Increasing government spending
Fighting recessionary pressures

Question 5

Contractionary Fiscal Policy

Answer 5

Increasing taxes
Decreasing government spending
Slows down the economy

Question 6

Expansionary Monetary Policy

Answer 6

Central Bank uses tools to stimulate the economy Increases the money supply, lowers interest rates, and increases aggregate demand
E.g. Decreases in discount rate

Question 7

Contractionary Monetary Policy

Answer 7

Central bank uses monetary policy tools to fight inflation

The bank must slow economic growth

Question 8

Give an example of contractionary monetary policy

Answer 8

Charge higher interest rates
Businesses borrow less, hire less, expand less, reduces demand
Decreases inflation