part 4, 3

Question 1

What do we mean by surpluses and deficits?

Answer 1

A budget surplus is a positive budget balance and a budget deficit is a negative budget balance.

Question 2

More deeper, what does deficit mean?

Answer 2

A deficit is a negative difference between the amount of money a government spends (G) and the amount it receives in taxes over a given period (usually one year).

Question 3

What is the difference of debts and deficit?

Answer 3

In difference, a dept is the sum of money a government owes at a particular part of time.

Question 4

Define monetary policy.

Answer 4

The attempt by government to manipulate the supply of, or demand for money in order to achieve specific objects.

Question 5

The monetary policy ahas two key variables, which?

Answer 5

• Interest rate (ir)
• Money supply. When the government wishes to stimulate the economy, it is likely to seek to increase in the money supply (lowering interest rate). When the government wishes to dampen down the economy, it is likely to reduce the money supply (raising interest rate).