Government aims and policies Flashcards
chapter 24
name the economic objectives/ aims of the government
- achieve full employment
- achieve sustainable economic growth
- control of government finances
- promote balanced regional development
- improve infrastructure
- create a just social environment/ ensure equal distribution of wealth
- control price inflation
- maintain state services
- broaden the tax base
- care for the environment
- achieve equilibrium of the balance of payments
- stabilize the banking sector
define full employment!
… a situation in which employment is available for all those prepared to work at existing wage levels
it occurs when the labour force is fully employed in productive work.
what are the economic benefits of a full employment economy in Ireland ?
- REDUCED SOCIAL WELFARE BILL
- INCREASED AGGREGATE DEMAND WITHIN THE ECONOMY / ECONOMIC GROWTH
- INCREASED STANDARD OF LIVING
- INCREASED GOVERNMENT TAX REVENUES
- INCREASED INVESTMENT
What are the economic difficulties of a full employment economy in Ireland?
- possible labour shortages
- wage demands
- inflationary pressures
- pressure on state infrastructure
- deterioration/ loss of services
what does sustainable economic growth look like?
economic growth is when the average income per head of population increases without any fundamental change in the structure of society.
this growth results an increase in the standard of living for a country’s citizens.
benefits significantly outweigh any costs
how can a government strategically achieve economic growth?
- providing an economic infrastructure in which private industry can survive and flourish (reduce VAT for the service industry)
- adopt fiscal and monetary policies that stimulate private industry (low rates of corporation tax and low interest rates for start-ups)
- promoting government policies designed to encourage the private sector (e.g. grants and training schemes)
- lowering the minimum wage rate
- sponsoring state training corporations
- reducing bureaucracy (state regulations) for companies
what are the positive economic consequences of economic growth?
- increased employment
- improved government finances
- effect on balance of payments
- improved standard of living
- effects on migration
- investment opportunities
what are the negative consequences of economic growth?
- inflationary pressures
- labour shortages
- damand for wage increases
- increased demand for imports
- pressure on the housing market
- pressure on state infrastructure
- increased immigration/ displacement of population
what are the positive consequences of an economy in decline?
- lower inflation
- labour shortages
- falling demand for wage increases
- reducing demand for imports
- less pressure in the housing market
- expectation of citizens
what are the negative economic consequences of an economy in decline?
- increased unemployment
- falling government finances
- lower standard of living
- effects on migration
- investment opportunities
- less funds for infrastructure
control of government finances
page 361/362
define regional development!
all regions share in the economic growth of the country
policies to achieve balanced regional development…
- decentralize the public service
- tax and other incentives to attract industry
- investment in the infrastructure
- investment in communication
- develop/ promote educational opportunities in the regions
- improved access to and from other regions
- easing planning restrictions in building residential property
- providing leadership programmes
- government spatial strategy
can the government experience conflicts when trying to implement a balanced regional development policy?
- property prices can increase in certain areas
- expenditure on infrastructural improvement
- policies to achieve industrial development V policies to promote tourism in regional locations
- increased regional industrialisation because of increased social costs such as pollution, congestion and increased local government changes
how can the government improve infrastructure?
- development of road infrastructure
- provision of public transport
- development of airports and seaports
- significant increase in the quality of telecommunications infrastructure
what is meant by a social policy?
…refers to the provision of income and/or services for those who would find it difficult to provide for themselves if exposed to the full rigors of the market economy.
what is meant by an equitable distribution of income?
that the gap between rich and poor is not excessive, but still enough to create incentives to work.
what is meant by a loss of competitiveness ?
a situation where our goods abroad are less attractive to foreign buyers.
benefits of a controlled price inflation.
- stabilizes the cost of living
- prevents demand for wage increases
- keeps Irish industry internationally competitive
why does the government seek to control inflation?
- if our inflation rate is higher than our competitors’ we would see a loss of competitiveness (less exports)
- difficulty in encouraging foreign industrialists to invest in Ireland if our costs of production are high (e.g. higher wages)
- workers and their representatives will try to negotiate increased wages during inflationary times to compensate for a loss in their existing purchasing power.
- suffering of the economical weaker section of the community. (e.g. pensioners, recipients and social welfare benefits or anyone on a fixed income.
what state services must always be maintained by the government?
- health services
- schools, education system
- adequate housing
- future pensions and help redistribute income
what are the positive consequences of a government policy to increase public service charges?
- less pressure to increase taxes or borrowings
- more efficient use of services
- target the use od resources more economically
- pressure to improve quality of service
- lower tax base
- uses of revenue collected
what are the negative consequences of a government policy to increase public service charges?
- increased cost of living
- increased inflation
- affects lower-income groups most
- viability of partnership agreements
- inequity / fairness
- higher cost for business