4.5.4 - Macroeconomic Policies In A Global Context

Question 1

What Are Exchange Rate Policies?

Answer 1

Policies, aiming to influence a country’s exchange rate

Question 2

What Are Examples Of Exchange Rate Policies?

Answer 2

~ Changing interest rates.

~ Foreign currency transactions.

Question 3

What Are Direct Controls?
(2 Points)

Answer 3

~ Government-imposed measures, that directly regulate economic activities.

~ E.g. NMW.

Question 4

What Are Problems Facing Policymakers?
(3 Points)

Answer 4

~ Inaccurate information.

~ Risks and uncertainty

~ Inability to control external shocks.

Question 5

Describe ‘Inaccurate Information’ As A Problem Policymakers Face
(2 Points)

Answer 5

~ Can lead to a misallocation of resources.

~ E.g. GDP and unemployment figures are hard to calculate, due to inaccurate information.

Question 6

Describe ‘Risk & Uncertainty’ As A Problem Policymakers Face
(2 Points)