Government Policy

Question 1

The monetary policy aims too….

Answer 1

1. Control inflation
2. control overall rate of economic growth
3. manage unemployment levels
4. influence foreign exchange rates

Question 2

Financial fiscal policy...
When's it done? 
How's it done? 
Change in government borrowing? 
The effect it has?

Answer 2

1. Economic slowdown / high unemployment
2. Cutting taxes and / or raising spending
3. Government borrowing increases
4. Demand for goods and services increase

Question 3

Contradictionary fiscal policy 
When's it done? 
How's it done? 
Change in government borrowing? 
The effect it has?

Answer 3

1. Production at 100% capacity / risk of high inflation
2. Raising taxes and / or cutting spending
3. Government borrowing decreases
4. Demand for goods and services decreases

Question 4

What is nationalisation!

Answer 4

Means taking the business into government ownership

Question 5

Issues with becoming nationalised

Answer 5

1. Usually creates a legally protected monopoly
2. Lack of competition
3. Leeds to inefficiency and poor quality
4. Don’t often make much profit

Question 6

Benefits of privatisation

Answer 6

1. Promotes competition
2. Increases efficiency
3. Offers better quality products at lower prices
4. Government make a big profit from privatisation. Help government to cut taxes and reduce it’s borrowing which in then encourages business activity

Question 7

Drawback of privatisation

Answer 7

1. Raised prices
2. Cut quality
3. Have lots of shareholders who look for quick profit rather than long term strategy of the business

Question 8

What does the monetary policy do…

Answer 8

1. Tweaks the interest rate to control inflation and exchange rates