A-Level Evaluation Points

Question 1

Laffer curve

Answer 1

Cutting rates of tax may increase revenues as people re-enter workforce. targeted taxation on high earners could reduce effects on the backwards bending supply curve

Question 2

Crowding in/out

Question 3

J curve

Answer 3

The J curve is the time lag between a falling currency and an improved trade balance.

Question 4

Backwards bending supply curve

Question 5

Marshall learner

Question 6

Evaluation of using tight fiscal ploicy

Answer 6

• Cut in government spending may lead to the under provision of public goods/services
• it may depend upon the size of the multiplier
• depends upon the liquidity trap (and other macro policies)
• high tax discourages economic activity
• gov spending can be supply-side which will aid the economy
• laffer curve
• may lead to a increas in inequality
• May lead to a decrease in wealth affect

Question 7

Evaluation of expansionary fiscal policy

Answer 7

• may lead to execration of the rate of inflation cutting real incomes and therefore spending by households
• the marginal propensity to import (raising incomes may increase demand for imports which will widen the net trade defecit)
• it will lead to a rise in business confidence
• size of output gap
• size of multiplier
• consumer/business confidence
• laffer curve
• state of government finances
• crowding out vs crowding in
• role of automatic stabilisers
• demand pull inflation (government investment but depends in the state in the economy )