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Economic Policy Instruments

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Regulation and Deregulation

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Measures to control or liberate business practices for safety, fairness, or environmental reasons, which can impact market competition and efficiency.

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Carbon Pricing

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Assigning a cost to carbon emissions to incentivize reduction in greenhouse gas emissions, influencing energy markets and investments in clean technology.

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Central Bank Digital Currency (CBDC)

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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.

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Inflation Targeting

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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.

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Monetary Base

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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.

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Privatization

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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.

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Fiscal Multiplier

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A measure of the economic impact of government spending on the overall economic activity. An increased fiscal multiplier implies a larger effect on GDP.

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Subsidies

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Financial assistance provided by the government to support industries or activities deemed beneficial to the public, can distort market outcomes and lead to inefficiencies.

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Public Debt Management

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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.

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Nationalization

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The transfer of private sector assets into public ownership, potentially to safeguard essential services or resources, but may discourage foreign investment.

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Fiscal Consolidation

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Policy aimed at reducing government deficits and debt accumulation by cutting spending or increasing revenue, which can influence economic growth and investor confidence.

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Debt Relief Initiatives

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Efforts to reduce the debt burden on countries or individuals, which can free up resources for economic development but may impact lenders' returns.

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Banking Regulation

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Regulations that govern banking operations, capital requirements, and risk management, aiming to ensure stability and protect depositors.

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Anti-Dumping Duties

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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.

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Taxation

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Governments use various forms of taxes to collect revenue and redistribute income. Taxation can incentivize or discourage certain economic behaviors.

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Pension Reforms

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Changes made to public or private pension systems to ensure their sustainability and adequacy, often in response to aging populations and economic pressures.

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Foreign Direct Investment (FDI) Policies

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Rules and incentives to attract or restrict investments from foreign entities, which can drive economic growth and development or protect strategic industries.

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Tariffs

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Taxes imposed on imported goods to protect domestic industries, which can lead to increased consumer prices and affect international trade relationships.

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Trade Agreements

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Negotiated deals between countries to set the rules for trade, which can increase economic opportunities and impact domestic industries.

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Environmental Taxes

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Taxes on pollution or the usage of natural resources intended to reflect environmental costs in market prices and encourage sustainable practices.

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Price Controls

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Government-imposed limits on the prices charged for goods and services, which can keep essentials affordable but may lead to shortages or reduced quality.

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Government Spending

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Fiscal policy tool where government expenditures can stimulate or contract economic activity. Infrastructure spending can lead to job creation and economic growth.

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Monetary Policy Independence

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The ability of a central bank to set monetary policy without political interference, crucial for maintaining economic stability and controlling inflation.

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Minimum Wage Legislation

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Government-mandated lowest hourly wage, aimed at protecting workers’ living standards but potentially impacting employment levels and business costs.

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Exchange Rate Policy

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Government or central bank policies to determine the value of the national currency relative to others, affecting imports and exports balance and inflation.

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Competition Policy

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Laws and regulations to promote or maintain market competition by preventing monopolies, cartels, or anti-competitive practices which can enhance consumer welfare.

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Economic Sanctions

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Restrictive measures applied by countries against others to achieve foreign policy goals, which can detrimentally affect the target country's economy.

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Interest Rates

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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.

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Quantitative Easing

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A monetary policy where central banks purchase securities to lower interest rates and increase the money supply, aiming to stimulate economic activity.

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Labor Market Policies

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Policies affecting labor supply and demand, such as training programs and unemployment benefits, which impact employment rates and workforce productivity.

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