Economics Section C Part 3

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What do all policies aim to do?
Promote economic growth, reduce unemployment and inflation, balance the current account and protect the environment.
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What are the positive effects of expansionary fiscal policy?
Lower unemployment, more growth, better public services, more tax revenue (lower tax, less avoidance- more profit and income)
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What are the negative effects of expansionary fiscal policy?
Higher inflation, more imports, more debt.
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What are the positive effects of contractionary fiscal policy?
Lower inflation, less debt, less imports.
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What are the negative effects of contractionary fiscal policy?
Higher unemployment, poorer public services, less growth.
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What are the positive effects of tight monetary policy?
Discourage borrowing, reduce demand, lower inflation, encourage saving and benefit those who rely on it, strengthen exchange rates.
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What are the negative effects of tight monetary policy?
Discourage borrowing, reduce demand, reduce growth, increase unemployment and mortgage payments, raise business costs, cut profits and investment, strengthen exchange rates- imports cheaper, exports dearer (bad for BoP).
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What are the positive effects of loose monetary policy?
Encourage borrowing, increase demand, create jobs and growth, cut exchange rates, lower export prices & raise import prices (good for BoP), lower cost of gov debt, encourage investment and imporve efficiency.
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What are the negative effects of loose monetary policy?
Increase demand and inflation, increase imports (if demand higher)- worsen BoP, reduce exchange rate, raise price of imports- leads to inflation.
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Other cards in this set

Card 2

Front

What are the positive effects of expansionary fiscal policy?

Back

Lower unemployment, more growth, better public services, more tax revenue (lower tax, less avoidance- more profit and income)

Card 3

Front

What are the negative effects of expansionary fiscal policy?

Back

Preview of the front of card 3

Card 4

Front

What are the positive effects of contractionary fiscal policy?

Back

Preview of the front of card 4

Card 5

Front

What are the negative effects of contractionary fiscal policy?

Back

Preview of the front of card 5
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