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3&4 Economics > U4 AOS1 - Aggregate Demand-Side Policy > Flashcards

U4 AOS1 - Aggregate Demand-Side Policy Flashcards

1
Q

The phrase aggregate demand-side policies can refer to:

A

Budgetary or Monetary Policy

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2
Q

The RBA’s Charter Goals:

A

Stability of the Australian currency
Maintenance of Full Employment
The wellbeing and prosperity of the Australian people

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3
Q

How would Conventional Monetary Policy (Open market operations) be used to increase the target cash rate?

A

Selling government securities.

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4
Q

How would Conventional Monetary Policy (Open market operations) be used to decrease the target cash rate?

A

Buying government securities.

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5
Q

An unconventional monetary policy tool where the RBA can warn the general public about potential future changes to monetary policy.

A

Forward guidance

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6
Q

The four transmission mechanisms are:

A

Savings and investment
Cash flow
Asset prices and wealth
Exchange rate

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7
Q

The transmission mechanism which outlines how changes in monetary policy impact household discretionary income

A

Cash flow channel

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8
Q

The transmission mechanism which explains the impact of changes in monetary policy on the reward for saving or incentive to invest

A

Savings and investment.

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9
Q

The transmission mechanism which explains how changes in monetary policy will impact how wealthy someone feels.

A

Asset Prices and Wealth

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10
Q

The transmission mechanism which explores how monetary policy impacts inflow or outflow of capital and therefore demand and supply of the Australian dollar

A

Exchange rate

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11
Q

The stance of monetary policy if the cash rate is set high to slow the economy

A

Contractionary

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12
Q

The stance of monetary policy if the cash rate is set low to stimulate the economy

A

Expansionary

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13
Q

Which domestic goal does the RBA target before any other?

A

The Goal of Low Inflation

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14
Q

Monetary policy being a blunt instrument is a

A

Weakness of monetary policy

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15
Q

Monetary Policies short implementation lag is a

A

Strength of Monetary Policy

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16
Q

Monetary Policies long impact lag is a

A

Weakness of monetary policy

17
Q

The 3 sources of government revenue

A

Direct tax, indirect tax and non-tax government revenue

18
Q

RBA’s independence from the government is an example of

A

A strength of monetary policy

19
Q

Tax systems can be ____________, (higher the more someone earns) _______________ (higher the less someone earns), or _______________ (always the same)

A

Progressive, regressive or proportional

20
Q

The three main types of government expenses

A

Current, capital expenditure and transfer payments

21
Q

The three possible budget outcomes.

A

Balanced, surplus, deficit

22
Q

A budget balance which excludes any revenues which do not have a direct impact on the economy in the current period

A

Underlying budget balance

23
Q

3 ways of financing a budget deficit

A

Selling bonds to the RBA
Selling bonds to overseas
Selling bonds to the private sector

24
Q

3 ways a surplus can be utilised are

A

Repay debt
Save with the RBA
Add to investment balances in special savings funds

25
Q

A budget deficit is likely to ____________ the level of public debt

A

Increase

26
Q

Automatic stabilisers refer to:

A

The built-in components of budgetary policy which work countercyclically to correct the level of economic activity

27
Q

What two things are considered automatic stabilisers?

A

Tax revenue and welfare outlays.

28
Q

Discretionary stabilisers are:

A

The deliberate changes to budgetary policy.

29
Q

The stance of a surplus budget is

A

Contractionary

30
Q

The stance of a deficit budget is

A

Expansionary

31
Q

The ability to target specific sectors is a

A

Strength of budgetary policy

32
Q

A long implementation lag and political hurdles are

A

Weaknesses of budgetary policy

33
Q

A short impact lag is a

A

Strength of budgetary policy.

3&4 Economics (3 decks)

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