Government Management of Economy and the impact

Match the following- government management strategies

• Decrease cash rate

• Contractionary Monetary Policy

• Increase cash rate

• Expansionary Monetary Policy

• Decreasing taxes

• Contractionary Fiscal Policy

• Decreasing Spending

• Expansionary Fiscal Policy

Contractionary fiscal policy involves the ​ (a)   government ​ (b)   taxes and decreasing ​ (c)   . This is to decrease the amount of money that ​ (d)   have to ​ (e)   the economy.

• federal
• increasing
• spending
• households
• slow
• decrease
• cash rate
• decreasing
• the cash rate

Changes to taxation is what type of government management strategy

• Fiscal

• Monetary

Changes to government spending such as social welfare payments is what type of government management strategy

• Fiscal

• Monetary

Changes to the cash rate is what type of government management strategy

• Fiscal

• Monetary

Label the phases of the trade cycle

c

d

e

f

Unemployement

Trough

GDP

Peak

Contraction

Expansion

Circle the period (s) of time when inflation is the highest

Circle the period (s) of time when the RBA must implement expansionary monetary policy (decrease cash rates)

If the RBA increases the cash rate what will be the short term impact on the economy?

• Increase in interest rates which decreases the amount of money in the economy

• Decrease in interest rates which increases the amount of money in the economy

• Inflation increases because of the increase in spending

• Inflation decreases because of the decrease in spending

If the RBA decreases the cash rate what will be the long term impact on the economy?

• Increase in interest rates which decreases the amount of money in the economy

• Decrease in interest rates which increases the amount of money in the economy

• Inflation increases because of the increase in spending

• Inflation decreases because of the decrease in spending