monetary and fiscal policies

Question 1

monetary policy

Answer 1

involves changes to interest rates, the money supply and the exchange rate by the Central Bank in order to influence AD

Question 2

expansionary monetary policy

Answer 2

policies to increade AD

Question 3

expansionary monetary policy

inflation

Answer 3

aims to increase demand pull inflation if the inflation rate is below target

hits the macroeconomic objectives

Question 4

expansionary monetary policy

growth

Answer 4

to boost economic growth

hits the macroeconomic objectives

Question 5

expansionary monetary policy

unemployment

Answer 5

to reduce unemployment

macroeconomic

Question 6

expansionary monetary transmission mechanism

credit card interest rates

Answer 6

central banks will cut interest rates which is the expantionary policy being used
- lower credit card interest rates –> lower borrowing costs which insentives more borrowing and less saving which will increase MPC

Question 7

expansionary monetary transmission mechanism

saving rates

Answer 7

reduces the insentive to save and increases the insentive to spend instead therefore increasing consumption