Quelpr
3 marksFiscal Policy

CAPE Economics Unit 2 · 2014 · Paper 2 · Question 4(a)(ii)

Explain the term 'automatic stabilizer'.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 4(a)(i)Define the term 'balanced budget multiplier'.[2 marks]
  2. 4(a)(iii)Identify TWO examples of automatic stabilizers.[2 marks]
  3. 4(b)(i)Explain how government borrowing to finance fiscal deficits can have a negative impact on Inflation.[3 marks]
  4. 4(b)(ii)Explain how government borrowing to finance fiscal deficits can have a negative impact on Domestic investment.[3 marks]
  5. 4(b)(iii)Explain how government borrowing to finance fiscal deficits can have a negative impact on Domestic interest rates.[3 marks]
  6. 4(c)(i)Define the term 'fractional reserve banking system'.[2 marks]
  7. 4(c)(ii)With the use of an example, describe how commercial banks use a 'fractional reserve banking system' to create money.[7 marks]

More practice: the rest of this paper · more Fiscal Policy questions · all CAPE Economics Unit 2 past papers