Govt Aims And Policies

Question 1

Inflation (FP)
Increasing ——–,e.g. income tax, will reduce ———- ——. Therefore there will be less —— for —– and services which will —— inflation.

Answer 1

Increasing TAXATION, e.g. income tax, will reduce DISPOSABLE INCOME. Therefore there will be less DEMAND for GOODS and services which will REDUCE inflation.

Question 2

Inflation (MP)
The government could use ——– rates to control ———. Interest rates make it more ——— to borrow so —— for goods and services will —- and pressure will be put off ——.

Answer 2

The government could use INTEREST rates to control INFLATION. Interest rates make it more EXPENSIVE to borrow so DEMAND for goods and services will FALL and pressure will be put off PRICES.

Question 3

Unemployment (FP)
Increasing government spending - government could subsidise large/essential industries, e.g. ———. Firms could —— more at all —— so demand more ——- – ———- so unemployment will —-.

Answer 3

Increasing government spending - government could subsidise large/essential industries, e.g. TRANSPORT. Firms could SUPPLY more at all PRICES so demand more FACTORS OF PRODUCTION so unemployment will FALL.

Question 4

Unemployment (MP)
By ——– interest rates, government are encouraging —– to ——. If firms are investing they may need more resources and —— more ——, so reduce levels of ————.

Answer 4

By LOWERING interest rates, government are encouraging FIRMS to INVEST. If firms are investing they may need more resources and DEMAND more LABOUR, so reduce levels of UNEMPLOYMENT.