2.6.2 Demand-Side policies

Created by: 13clarken
Created on: 18-04-19 10:29

... policies aim to achieve all the government macroeconomic policies. They are used to influence Aggregate demand and they include monetary policy and fiscal policy

Demand Side

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... instruments include: Interest rates and quantitative easing (asset purchase) which are both controlled by the Bank of England

Monetary Policy

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... instruments include: Tax and government spending

Fiscal Policy

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The ... control inflation and make interest rate decisions. They use: Changing the base rate of interest and Quantitative easing

MPC

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... : A change in ... causes a shift in aggregate demand. There is no investment with high ... and net exports are also affected by ...

Interest rates

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... is purchasing financial assets called long term loans called gilts. The are designed to directly inject money into the economy . The wealth effect will increase spending, boosting aggregate demand. Households will have portfolios with high value

Quantitative Easing

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... fiscal policy means cutting tax or raising government spending or a combination of both

Expansionary

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... fiscal policy means tax is greater than government spending

Contractionary

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If Government Spending (G) is greater than Tax (T), the government has a budget ...

Deficit

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If Tax (T) is greater than Government Spending (G), the government has a budget

Surplus

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Direct ... has a greater impact on aggregate demand whilst indirect ... affects aggregate supply

Tax

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Other cards in this set

Card 2

Front

... instruments include: Interest rates and quantitative easing (asset purchase) which are both controlled by the Bank of England

Back

Monetary Policy

Card 3

Front

... instruments include: Tax and government spending

Back

Card 4

Front

The ... control inflation and make interest rate decisions. They use: Changing the base rate of interest and Quantitative easing

Back

Card 5

Front

... : A change in ... causes a shift in aggregate demand. There is no investment with high ... and net exports are also affected by ...

Back

View more cards

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2.6.2 Demand-Side policies