quiz #3 sept 5

Question 1

macroeconomics

Answer 1

the study of the economy as a whole, rather than the individual markets and other elements of which it consist.

Question 2

four goals of macroeconomics

Answer 2

1. stable prices
2. unemployment at minimum
3. economic growth
4. balance of payment equilibrium

Question 3

fiscal policy

Answer 3

the use of government spending and taxation to control aggregate demand in the economy.

Question 4

monetary policy

Answer 4

use of interest rates and other direct measures to control money supply; and aggregate demand in the economy.

Question 5

reflationary monetary policy

Answer 5

monetary policy that increases the money supply and aggregate demand in terms of ‘expansionary’ or ‘reflationary’ (low tax=high spending)

Question 6

deflationary monetary policy

Answer 6

monetary policy that decreases the money supply and aggregate demand in term of ‘contractionary’ or ‘deflationary’ (high tax=decrease in spending)

Question 7

4 ways to put in play reflationary monetary policy

Answer 7

1. reducing interest rates
2. improving the availability of credit
3. open market operations
4. reducing the required reserve ratio

Question 8

4 ways to put in play deflationary monetary policy

Answer 8

1. increase interest rates
2. make credit less accessible
3. open market operations
4. increase the required reserve ratio