Economics Section C Part 3 0.0 / 5 ? EconomicsSection C Part 3IGCSEEdexcel Created by: natashamay26Created on: 20-04-14 10:03 What do all policies aim to do? Promote economic growth, reduce unemployment and inflation, balance the current account and protect the environment. 1 of 9 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) 2 of 9 What are the negative effects of expansionary fiscal policy? Higher inflation, more imports, more debt. 3 of 9 What are the positive effects of contractionary fiscal policy? Lower inflation, less debt, less imports. 4 of 9 What are the negative effects of contractionary fiscal policy? Higher unemployment, poorer public services, less growth. 5 of 9 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. 6 of 9 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). 7 of 9 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. 8 of 9 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. 9 of 9
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