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Chapter 19 - Coggle Diagram
Chapter 19
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Monetary Policy
Hot money is increased because people are more likely to increase due to more demand for pounds and exports are cheaper
Fiscal policy is through tax and government spending, it is controlled by the government which effects the level of demand in the economy
Concerned with manipulating the level of demand in the economy through the power of interest rates with people being more encouraged to take out loans and savers with higher interest rates
Interest Rates
High interest rates people are going to start saving because they are going to get more with their money sat in the bank.
Effects. A fall in the rate of interest will encourage investment because people are more willing to take a loan because there is not as much to pay back.
Low interest rates. If interest rates fall then they are going to stop saving and start spending because they aren't getting anything from their money so why not.
Economic Policy
Steering is done in four ways: monetary policy, fiscal policy, supply side policy and exchange rate.
Supply side policy is different from the monetary or the fiscal policy it is to increase the capacity of production and to focus on the supply of goods rather than the demand
They reduce welfare benefits encouraging the unemployed to get jobs and not sit on the benefits of dole
Income tax cuts encourages people to seek jobs because they would pay more because their is less tax
Its concerning with meeting all four objectives, to create an environment in which the business will grow and the government steers the economy