econ unit 4
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8 Terms
demand side policies
fiscal and monetary policy influencing aggregate demand
limitations to fiscal policy
political constraints, implementation time lag, budget deficit and debt
limitations to monetary policy
less direct may not lead to desired effect, impacts exchange rate, uncertainty in transmission mechanism
implementation lag
how long it takes to decide what needs to be done and to do it
effect lag
how long it takes for the effects to be measurable in the economy
pros of fiscal policy
fast effect lag, can be very targeted
microeconomic reform
supply-side policies done by the government to make individual markets more efficient, productive and competitive, easier to do business and remove price distortions
examples of microeconomic reform
tariff removals, floating of the dollar, wages and price accord