Please answer today's economics questions.
a) What are the four macroeconomic objectives?
b) In the following diagram, what is the most likely reason for what is happening to AD?
An increase in government spending coupled with an increase in taxes to maintain the same government revenue
An decrease in exports
An increase in interest rates
A reduction in the value of imports
c) Define the term interest rate.
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ANSWERS
a) The answer is sustainable GDP Growth, Price Stability (low inflation), full employment and a healthy balance of payments.
b) Answer number 4. A reduction in the value of imports means that there are less leakages from the circular flow of income, causing AD to increase.
c) An interest rate can be defined in two ways: the cost of borrowing/the reward for saving, as a percentage.