Macroeconomic Policy Flashcards

(18 cards)

1
Q

Explain reasons why the Macro- supply curve might shift to the right

A
  • supply increase per. price
    • tech. innov.
      -inno. legislation
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2
Q

Give reasons why the macro-demand cuve would shift to the right

A

-inc. tax decrease

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3
Q

Explain the macro-demand curve when aggregrate demand increases

A
  • gen. price level incr.
    -real GDP increases
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4
Q

Explain Keysenian policy on how to increase GDP

A

-Supply given
-supp. curbe given
-more expend. = more GDP
- So incr. Demand
-incr. gov. exp.
-incr. priv. exp.
-multip. effect

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5
Q

Explain the Keynesian budgetary policy AS curve

A

AS= Agrregrate supply
-Supply potential stays consistent, until
-used up capacity
-then price incre.

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6
Q

Explain the Supply Side’s view on how to increase GDP

A

-incentivise increased supp.
-thru lowering TAXES
-higher GDP
-incentivise 2 take up labour

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7
Q

Explain the supply side’s opinion on whether lower taxes lead to less gov. rev.

A
  • to SOME extent
    -but at first increases (laffer curve)
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8
Q

TRUE or FALSE: significant increase in demand oftentimes results in inflation

A

-TRUE

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9
Q

‘Keynesian policy is more imprecise than Supply Side Budgetary Policy’ Argue for or against this statement.

A

FOR
-Hard to reach sweet spot, when rely on dem.
-too little stimulation of AD:
-no effect
-too much stimulation:
-infl. + budg. deficit

                   \+

LIMIT. budget deficit
stim. comp. 2 invest (long term)

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10
Q

Explain the weaknesses of the supply side fiscal policy

A

-too little stim. of AD

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11
Q
A
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12
Q

Explain the benefits of harmonisations

A
  • Lower TCS for FIRMS+ CONS.
    -same rules + rights
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13
Q

Explain the costs of harmonisation

A
  1. remaining leg diff. limit TC reducation
    -diff in interp.
    -diff in loval case law
  2. No free movement of leg. rules/ judgments now
    -comp. btwn MS rules: may the least TCs win
  3. One size fits all could redu. welfare
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14
Q

Explain what expansionary legal policy is

A
  • use of COURTs, ADM. + REGU. 2 further stimul.
    overall dem. 4 goods and serv. during a recession
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15
Q

TRUE or FALSE: capital req. usually reduce during a recession

A

-true

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16
Q

Describe the fisher equation of exchange

A

M x V= P x T
-M–> money supply (circulating in economy)
-V–> velocity of money
-P= general price level
-T= number of transactions
-value money flow= value flow of goods

The total amount of money spent in the economy (left side)
is equal to
the total value of all goods and services sold (right side).

-only if T cannot increase further, P will increase

17
Q

TRUE or FALSE Globalisation is the encgine of economic growth, not the accelarator of economic crises

18
Q

List potentially risky government failures in response to economic crises

A

-over regu.
-protectionism
-limit market forces