Government Policies -unit 2

Question 1

Fiscal policy

Answer 1

A government policy with regards to public expenditure, taxation and borrowing.

Question 2

Budget surplus

Answer 2

If tax revenues are greater than government spending then this is said to be a contractionary policy

Question 3

Budget deficit

Answer 3

If tax revenues are less than government spending then this is said to be an expansionary policy

Question 4

Balanced budget

Answer 4

If government spending and tax revenues are equal

Question 5

Monetary policy

Answer 5

Government policy with regards to interest rates and growth of money supply

Question 6

3 main functions of money -

Answer 6

A medium of exchange, measure of value and a store of value

Question 7

Good money must be -

Answer 7

Acceptable, durable, divisible, portable and scarce

Question 8

Supply side policy

Answer 8

Government policy aimed at increasing the total supply in an economy.

Question 9

Benefit and cost of fiscal policy

Answer 9

You can tax/subsidise specific goods and services, however it is open to political interference.

Question 10

Benefit and cost of monetary policy

Answer 10

These aren’t controlled by the government, however they take 18-24 months to fully take effect

Question 11

Benefit and cost of supply side policy

Answer 11

Creates sustainable economic growth however results aren’t always successful