Chapter 2: The Economic Environment

Question 1

what types of economies are there?

Answer 1

planned, free market, mixed

Question 2

what are open economies?

Answer 2

countries where there is a large degree of openness in terms of the level of trade and trade barriers between that country and other countries, related to FX (whether or not govt implements controls or allows FX rates to fluctuate)

Question 3

what are the macro economic objectives?

Answer 3

TIGERSB

Question 4

what are the stages of the economic cycle?

Answer 4

recession, trough, growth, peak/boom

Question 5

what is the difference between fiscal and monetary policy?

Answer 5

fiscal: actions by the govt to meet macro objectives (controlling spending and taxation)
monetary: actions taken by the central bank (interest rates and capital supply) to meet macro objectives

Question 6

what can interest rates be used to do?

Answer 6

stem inflation/ discourage spending depending on how they are used

Question 7

who are the financial regulators in the UK?

Answer 7

FCA, PRA (prudential regulation authority)