1- Major macro issues

Question 1

Macroeconomic instruments

Answer 1

• Bank rate (interest rate)
• Gov spending
• Tax rates
• Legal controls and restrictions

Question 2

Macroeconomic targets

Answer 2

• Economic growth
• Unemployment
• Income distribution
• Inflation
• Balance of payments

Question 3

Accounts in balance of payments

Answer 3

• Current account
• Capital account

Question 4

Value of the current account

Answer 4

0
current account usually in deficit and capital account in surplus

Question 5

What’s in current account?

Answer 5

Trade balance
- Debit
- Imports
- Transfers (aid to overseas)
- Income (factor income- wages, rent)
- Credit
- Exports
- Transfers

Question 6

What’s in the capital account?

Answer 6

• FDI

Question 7

What does having a current account deficit and capital account surplus?

Answer 7

Country is dependent on overseas