🛠️ Deck 3: Implementing Policy Flashcards
(16 cards)
Q: 🏛️ What is fiscal policy?
A: Government adjustments to its spending levels and tax rates to influence a nation’s economy.
Q: 💵 What is monetary policy?
A: The process by which a central bank manages the money supply and interest rates to achieve macroeconomic objectives.
Q: 📈 What are supply-side policies?
A: Measures aimed at increasing productivity and shifting Aggregate Supply to the right, such as tax cuts and deregulation.
Q: ⚔️ What are policy conflicts?
A: Situations where achieving one economic objective may hinder another, like reducing inflation potentially increasing unemployment.
Q: 💷 What is expansionary fiscal policy?
A: Increasing government spending or reducing taxes to boost aggregate demand.
Q: 📉 What is contractionary fiscal policy?
A: Decreasing government spending or increasing taxes to reduce inflationary pressure.
Q: 📊 What is a budget deficit?
A: When government spending exceeds tax revenue.
Q: 📈 What is the Bank Rate?
A: The interest rate set by the central bank that influences all other interest rates in the economy.
Q: 💵 What is quantitative easing (QE)?
A: A form of monetary policy where the central bank purchases financial assets to increase the money supply.
Q: 💬 How does monetary policy affect AD?
A: Lower interest rates increase consumption and investment, raising AD; higher rates do the opposite.
Q: 🛠️ What are supply-side policies?
A: Policies aimed at increasing the economy’s productive capacity, e.g., education, deregulation, tax reform.
Q: 🧰 What’s the difference between market-based and interventionist supply-side policies?
A: Market-based policies reduce regulation; interventionist policies involve direct government spending or support.
Q: 🧮 What are automatic stabilisers?
A: Features like progressive tax and welfare payments that naturally moderate the business cycle.
Q: 🏗️ What is capital government expenditure?
A: Spending on infrastructure, education, and investment goods.
Q: 💼 What is current government expenditure?
A: Day-to-day spending on public services and administration.
Q: 📉 What is crowding out?
A: When increased government borrowing leads to higher interest rates and reduced private sector investment.
