Economics Module 3 DBA (Flvs flex)

How can we tell how the economy is doing?

By GDP. GDP is important because it gives information about the size of the economy and how an economy is performing.

What is inflation?

It's a set of goods and services that become much more expensive over time.

Two things that can fix the economy?

Expansionary and contractionary

or fiscal policy tools and monetary policy.

Expansionary and contractionary for inflations:

A contractionary policy attempts to slow the economy by reducing the money supply and fending off inflation. An expansionary policy is an effort that central banks use to stimulate an economy by boosting demand through monetary and fiscal stimulus.

Fiscal Policy

The use of government spending and taxation to influence the economy.

Monetary Policy

A set of actions available to a nation's central bank to achieve sustainable economic growth by adjusting the money supply.

The Business Cycle

A relative economic changes that take place in a country for a certain amount of time.

How can fiscal policy and monetary policy fix the economy?

Monetary policy: To manage economic fluctuations and achieve price stability

Fiscal Policy: Expanding spending or cutting taxes to stimulate an ailing economy, or to help reduce external vulnerabilities.