Macroeconomic Objectives And Policies Flashcards
(8 cards)
What are the macroeconomic objectives?
Economic growth, low inflation (CPI target ~2%), low unemployment, balance of payments equilibrium, balanced government budget, income equality.
What is monetary policy?
Monetary policy involves interest rates and money supply.
What is expansionary monetary policy?
Expansionary monetary policy lowers interest rates to stimulate aggregate demand (AD).
What is contractionary monetary policy?
Contractionary monetary policy raises interest rates to reduce aggregate demand (AD).
What is fiscal policy?
Fiscal policy involves government spending and taxation.
What is expansionary fiscal policy?
Expansionary fiscal policy increases government spending and cuts taxes.
What is contractionary fiscal policy?
Contractionary fiscal policy reduces government spending and raises taxes.
What are supply-side policies?
Supply-side policies include education and training, tax incentives for investment, labour market reforms, deregulation, and infrastructure investment.
