What are Policy Instruments?

Tools used by government to achieve macroeconomic objectives

Changes in policy instruments can also affect other variables in the economy such as what?

Aggregate demand, inflation, unemployment, GDP.

Monetary policy is about what?

Interest rates and money supply

Supply side policies aim to:

Improve labour flexbility, promote competition & increase $$

Examples of policy instruments are:

Interest rate, tax levels, levels of government spending

Fiscal policy is about what?

Government spending, taxation and borrowing.

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ECONOMIC POLICIES

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IGCSE Economic policies recap

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Questions 14

Answers

1
Which policy is used to stimulate demand and reduce unemployment by lowering interest rates?
Tight Monetary policy
Expansionary Monetary Policy
Contractionary Monetary Policy
Loose Monetary policy
2
Tax is an example of a regulation.
False
True
3
What are Policy Instruments?
Musical Instruments used to entertain in government meetings
Tools used by government to achieve macroeconomic objectives
Tools used by government to achieve microeconomic objectives
4
Which policy is used to stimulate demand and involves increasing the budget deficit?
Contractionary Fiscal Policy
Expansionary Fiscal Policy
Tight fiscal policy
Loose fiscal policy
5
Changes in policy instruments can also affect other variables in the economy such as what?
Aggregate demand, inflation, unemployment, GDP.
Aggregate supply, unemployment, GDP
Nothing is affected.
The Environment
6
Monetary policy is about what?
Increasing supply of labour
Making the world a better place
Interest rates and money supply
Government spending, taxation and borrowing.
7
Supply side policies aim to increase what?
Aggregate supply
Aggregate demand
8
Supply side policies aim to:
Increase interest rates to reduce inflation
Improve labour flexbility, promote competition & increase $$
Increase the budget deficit
Reduce the money supply
9
Supply side policies focus on what?
Goods market
Labour market
Capital market
All of these
10
Fiscal policy and monetary policy are used to influence what?
Aggregate supply
Aggregate demand
11
Examples of policy instruments are:
Exchange rate, tax levels, levels of government spending
Income rate, tax levels, levels of government spending
Interest rate, tax levels, levels of government spending
Inflation rate, tax levels, levels of government spending
12
Supply side policy is?
Short term
Long term
13
Increasing labour productivity can be done by?
Improving flexibility
Improving the quality through education & training
All of these
Restoring incentives to work
14
Fiscal policy is about what?
Making the world a better place
Government spending, taxation and borrowing.
Increasing supply of labour
Interest rates and money supply

ECONOMIC POLICIES Flashcards | StudBud