Demand and Supply Side Policies, Output Gaps, and Economy

Which is an expansionary demand-side policy?

• lower interest rates

• increase government regulation

• increase interest rates

• decrease government spending on infrastructure

Define monetary policy.

• Involves the manipulation of monetary variables in order achieve government objectives.

• any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AD curve.

• Involves the government running a government or fiscal deficit (budget deficit).

• any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AS curve.

Define fiscal policy.

• any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AD curve.

• Involves the manipulation of monetary variables in order achieve government objectives.

• Involves the government running a government or fiscal deficit (budget deficit).

• any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AS curve.

Define supply-side policy.

• Involves the manipulation of monetary variables in order achieve government objectives.

• Involves the government running a government or fiscal deficit (budget deficit).

• any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AS curve.

• any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AD curve.

Which of the following is 'contractionary' monetary policy?

• decrease interest rates

• increase income taxes

• Bank of England 'buys' bonds, increasing the MS

• Bank of England 'sells' bonds, decreasing the MS

Which of the following is 'expansionary' fiscal policy?

• decrease interest rates

• The Bank of England 'buys' bonds, increasing the money supply

• decrease income taxes

• decrease spending on the military and defence

Which of the following is an 'injection' into the circular of income?

• Savings

• Taxation

• Imports

• Exports

Which of the following is a withdrawal from the circular flow of income?

• Exports

• Savings

• Investment

• Government Spending

Which of the following is the equation for the multiplier?

• 1 / MPT

• 1 / MPW

• 1 / MPC

• 1 / MPX + MPM

Which of the following is an example of 'expansionary' supply-side policy?

• Increasing competition in markets.

• Decrease competition in markets.

• Increase corporation taxes

• increase interest rates