Chapter 17 B

Question 0

What is fiscal policy?

Answer 0

deals with the tools of government spending and taxation. how active the gov is in altering the path of the economy.

Question 1

What is the monetary policy?

Answer 1

control over the supply of money. or the general liquidity of asset markets. how easily assets can be liquidated, how easily can credit be obtained, what the interest rates are at.

Question 2

Basic objective of gov fiscal and monetary policies?

Answer 2

to stabilize the pace of economic activities. avoid depression an high inflation.

Question 3

Wht are determinants of exchange rates?

Answer 3

the supply an demand of Canadian dollars in an international context. balance of trade. relative interest ad inflation rates.

Question 4

Inflation is controlled by?

Answer 4

CPI. and monetary policy affects inflation. if money supply grows fast, inflation increases.