chapter 14

Question 1

what were thatcher’s economic policies called?

Answer 1

monetarism

Question 2

in which year did the economy reach a recession?

Answer 2

1980
inflation above 15% and rising unemployment
stagflation

Question 3

what is monetarism?

Answer 3

the idea that the best way for a gov to control inflation is by restraining gov spending, borrowing and curbing money supply

Question 4

what is rate capping?

Answer 4

limits the amount of money a council is allowed to raise in a local taxation

Question 5

what’s a measure taken while enforcing monetaristic policies?

Answer 5

shift from direct taxation and instead things like VAT; indirect taxation

Question 6

what was the logic behind reducing direct taxation?

Answer 6

people would be able to keep the mone they earn and would incentivise wealth creation

Question 7

what are some examples of where VAT increased?

Answer 7

8% - 15% in 1979
taxes on cigs, petrol and alcohol went up in almost every budget between 1979-1987

Question 8

what is supply side economics?

Answer 8

low taxation & deregulation for businesses encourages enterprise and entrepreneurship
flexible labour makes it easier to fire/hire employees
employees spend on goods n services (encourage by low tax on individual)
businesses profit
profits encourage expansion/further investment

Question 9

what is denationalisation?

Answer 9

selling off publicy owned businesses to the private sector

Question 10

which companies were privatised in the first term?

Answer 10

BP in 1979
British aesrospace in 1980

Question 11

which company privatisations popularised the concept?

Answer 11

british telecom 1984
british gas 1986

Question 12

how much did the number of individuals owning stocks increase through 1979-90?

Answer 12

3 million to 9 million

Question 13

why did thatcher believe privatisation would be effective?

Answer 13

individuals will want to take care of something that they have a stake in
-more efficient at running/delivering goods & services

Question 14

how did privatisation mark a significant shift in the british economy?

Answer 14

signals the end of the post war consensus of economic management

Question 15

what is financial deregulation?

Answer 15

the loosening of controls of banks and financial markets.
leads to a boom of investment banking

Question 16

how was inflatin controlled?

Answer 16

interest rates - raised to 17% in 1979
downside is it makes it more expensive for businesses to borrow

Question 17

what are the effects of the high interest rates?

Answer 17

in early 1980s, led to a decline in output and demand
economy went into recessions with all the bankrupt businesses and unemployment raised

Question 18

what was the peak inflation?

Answer 18

22% in may 1980

Question 19

what wss the lowest inflation?

Answer 19

2.5% in 1986

Question 20

why was unemployment allowed to rise so drastically?

Answer 20

as the key threat was seen as control of inflation, not low levels of unemployment
industry had to be more competitive so this was an accepted side effect

Question 21

when were the highest unemployment rates?

Answer 21

april-june 1984, 3,300,000
did not fall below 3 mil until 1987

Question 22

why was a north-south divide created?

Answer 22

move away from old fashioned labour industries and move to technological innovation
northern areas were focused on these industries which were being neglected
large areas of dereliction left behind

Question 23

what did howe recommend thatcher do with liverpool?

Answer 23

leave it for a ‘managed decline’

Question 24

where were there riots in response to this in 1981?

Answer 24

april- july
brixton, toxteth in liverpool, handsworth in birmingham

Question 25

what did the scarman report determine to be the main causes of rioting?

Answer 25

poverty and race relations
areas of rioting were suffering high levels of unemployment & deprivation

Question 26

which new law caused racial tensions?

Answer 26

‘sus’ law
anyone suspicious looking could be stopped and searched if suspicious appearing
targets black and asian youths