UK Bank governor warns banks on lending

Read this article on the UK Governments current economic policy, and answer the following questions:

1) Define the following terms:

• Recession


• Nationalisation


• Aggregate Demand


• Monetary Policy


• Inflation

2) What are the 4 key macroeconomic objectives for any Government?

3) What has the UK Government pledged (promised) to do to help 3 of the UK’s biggest banks and for the wider banking sector?

4) Complete the following Gap Fill
The Governments promise to provide a “£20bn stimulus package” is an example of ____________ (fiscal/monetary) policy. ___________ policy is knows as a _________(demand/supply) side policy because it aims to increase aggregate (supply/demand)

5a) What is the UK’s current level of inflation?
5b) Explain why any government wants to keep inflation as low as possible
5c) Explain the policy conflict in this article