test

Question 1

why does structural unemployment occur and how can it be fixed

Answer 1

a mismatch between existing skills and those needed in new growth industries- supply side policies (long term) e.g.
1. improving skills through education and training
2. encouraging investment in new growth industries
3. helping workers move from one region to another

Question 2

what is the monetary policy

Answer 2

Policies that manipulate the money supply and interest rates and regulate the activities of banks to achieve monetary objectives such as an inflation rate target and availability of liquidity (loans)

Question 3

how to does interest rates going up decrease investment and therefore inflation

Answer 3

because higher rates increase the cost of borrowing and require investment to have a higher rate of return to be profitable.

Question 4

how to does interest rates going up decrease inflation for consumers

Answer 4

interest rates go up cost of borrowing goes up therefore less spending, slows the circular flow of income, gdp decreases less national output

Question 5

interest rates effecting exchange rates

Answer 5

interest rates go up demand for pounds increase, means exchange rates rise
- imports cheaper
-exports dearer
-AD decreases
–> consumption of foregin goods increases and output and demand for domestic goods decreases