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Economic Policy Instruments
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Regulation and Deregulation
Measures to control or liberate business practices for safety, fairness, or environmental reasons, which can impact market competition and efficiency.
Carbon Pricing
Assigning a cost to carbon emissions to incentivize reduction in greenhouse gas emissions, influencing energy markets and investments in clean technology.
Central Bank Digital Currency (CBDC)
A digital form of fiat money issued by a central bank, aimed at providing a secure and efficient payment system, potentially transforming the financial system.
Inflation Targeting
A monetary policy strategy where a central bank sets and publicly announces a prospective inflation rate and then aims to steer actual inflation towards the target.
Monetary Base
Total amount of a currency in circulation or in commercial bank deposits held in the central bank. Expanding the monetary base can lead to inflation if not managed correctly.
Privatization
The sale or transfer of state-owned assets to the private sector, intended to increase efficiency and promote competition but could lead to job losses and higher prices.
Fiscal Multiplier
A measure of the economic impact of government spending on the overall economic activity. An increased fiscal multiplier implies a larger effect on GDP.
Subsidies
Financial assistance provided by the government to support industries or activities deemed beneficial to the public, can distort market outcomes and lead to inefficiencies.
Public Debt Management
The process of determining the level and composition of government debt to ensure fiscal stability, which can affect a country's credit rating and interest payments.
Nationalization
The transfer of private sector assets into public ownership, potentially to safeguard essential services or resources, but may discourage foreign investment.
Fiscal Consolidation
Policy aimed at reducing government deficits and debt accumulation by cutting spending or increasing revenue, which can influence economic growth and investor confidence.
Debt Relief Initiatives
Efforts to reduce the debt burden on countries or individuals, which can free up resources for economic development but may impact lenders' returns.
Banking Regulation
Regulations that govern banking operations, capital requirements, and risk management, aiming to ensure stability and protect depositors.
Anti-Dumping Duties
Tariffs imposed on foreign imports believed to be priced below fair market value, protecting domestic industries from unfair competition but may increase prices for consumers.
Taxation
Governments use various forms of taxes to collect revenue and redistribute income. Taxation can incentivize or discourage certain economic behaviors.
Pension Reforms
Changes made to public or private pension systems to ensure their sustainability and adequacy, often in response to aging populations and economic pressures.
Foreign Direct Investment (FDI) Policies
Rules and incentives to attract or restrict investments from foreign entities, which can drive economic growth and development or protect strategic industries.
Tariffs
Taxes imposed on imported goods to protect domestic industries, which can lead to increased consumer prices and affect international trade relationships.
Trade Agreements
Negotiated deals between countries to set the rules for trade, which can increase economic opportunities and impact domestic industries.
Environmental Taxes
Taxes on pollution or the usage of natural resources intended to reflect environmental costs in market prices and encourage sustainable practices.
Price Controls
Government-imposed limits on the prices charged for goods and services, which can keep essentials affordable but may lead to shortages or reduced quality.
Government Spending
Fiscal policy tool where government expenditures can stimulate or contract economic activity. Infrastructure spending can lead to job creation and economic growth.
Monetary Policy Independence
The ability of a central bank to set monetary policy without political interference, crucial for maintaining economic stability and controlling inflation.
Minimum Wage Legislation
Government-mandated lowest hourly wage, aimed at protecting workers’ living standards but potentially impacting employment levels and business costs.
Exchange Rate Policy
Government or central bank policies to determine the value of the national currency relative to others, affecting imports and exports balance and inflation.
Competition Policy
Laws and regulations to promote or maintain market competition by preventing monopolies, cartels, or anti-competitive practices which can enhance consumer welfare.
Economic Sanctions
Restrictive measures applied by countries against others to achieve foreign policy goals, which can detrimentally affect the target country's economy.
Interest Rates
Used by central banks to influence the cost of borrowing money, thereby affecting consumption, investment, and inflation. Higher rates can slow inflation but may also dampen economic growth.
Quantitative Easing
A monetary policy where central banks purchase securities to lower interest rates and increase the money supply, aiming to stimulate economic activity.
Labor Market Policies
Policies affecting labor supply and demand, such as training programs and unemployment benefits, which impact employment rates and workforce productivity.
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