Macroeconomic policy instruments
- Created by: brandss
- Created on: 19-05-16 13:16
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- Macroeconomic policy instruments
- Demand management
- Reflationary policies
- seek to increase AD
- Deflationary polices
- deacrease AD from going ahead of AS
- otherwise would lead to inflation
- unsustainable deficit on balance of payments
- deacrease AD from going ahead of AS
- influences lvel of growth (AD), income, employment, inflation and BOP
- Reflationary policies
- Fiscal policy
- automatic stabaliser
- Gov spending and taxation change automatically
- (high gov spending = little employment therefore cant tax)
- (high tax = lots of employment so little need for Gov spending
- Gov spending and taxation change automatically
- discrestionary fiscal polciy
- deliberate changes to tax and spending
- use of Gov spending and taxation
- automatic stabaliser
- Monetary policy
- use of interest rates to control growth and AD
- quantitative easing to increase lending
- influencing exchange rate
- Supply-side policies
- improving supply potential
- not able to achieve growth by itself, must had high levels of AD
- Types of markets to influence
- product
- privatisation
- trade liberisation
- labour
- trade union power
- increased training
- reduced income tax
- lower NMW
- capital
- de-regulation of financial markets
- lower corp tax
- product
- Demand management
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