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11 Cards in this Set
- Front
- Back
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The European Union has issued a new regulation. This meansthat each member state: a) has the choice whether or not to adopt the regulation. b) must pass legislation to implement the regulation withintwo years. c) is bound by the regulation in its entirety regardless ofexisting legislation. d) has the choice of how to adopt the regulation’s objectives. |
c) is correct. Each member state is bound by the regulation in itsentirety regardless of existing legislation. Answers a), b) and d) relate toDirectives. |
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What is meant by a ‘macroeconomic objective’? |
An objective that relates to the economy as a whole, rather than to a speci c sector or individual company |
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What are the four key macroeconomic objectives that UKgovernments generally seek to achieve? |
Price stability, low unemployment, a balance of payments equilibriumand satisfactory economic growth. |
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What is a potential negative consequence of expandingeconomic growth to reduce unemployment? |
Measures taken to expand the economy (eg reducing interest rates andtaxation) increase the demand for goods and services, which is likelyto result in a rise in inflation. |
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All governments aim to achieve zero in ation. True orfalse? |
False. They aim to keep prices stable, but seeking to reduce in ationto zero is likely to increase unemployment. |
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What is the UK government’s in ation target and how is itmeasured? |
The UK government’s in ation target is 2 per cent with a maximumdivergence either side of 1 per cent. It is measured by the ConsumerPrices Index. |
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Dis inflation means that: a) prices are rising faster than previously. b) prices are falling. c) prices are rising but more slowly than previously. d) prices are staying the same. |
Prices are rising but more slowly than previously. |
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In June, the MPC decides to raise Bank rate by half a percentage point. In August, Paul and Amanda’s mortgagepayments increase. Explain how these two events are likelyto be linked. |
Paul and Amanda must have a variable-rate mortgage, so the amountthey pay each month is likely to rise and fall broadly in line withchanges in Bank rate. |
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Which of the following economic measures taken by agovernment would not help to achieve a budget surplus? a) Increasing taxation. b) Increasing public spending. c) Reducing public spending. |
Increasing public spending. To achieve a budget surplus a governmentmust cut public spending, raise taxes, or both. |
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A new piece of EU legislation is being introduced. It is beingimplemented at the same time and in exactly the same wayacross all member states. This indicates that the legislationis in the form of: a) a Directive. b) a regulation. |
A regulation. Member states have exibility in the way they introduceDirectives. |
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Which EU body is responsible for monitoring the nancialsystem for systemic risk and taking steps to reduce it? |
The European Systemic Risk Board (ESRB). |
