Lesson 12 - Government Policy

Question 1

Who was Margaret Thatcher?

Answer 1

First post-Keynesian prime minister

Question 2

What did Margaret Thatcher focus on?

Answer 2

• monetary policy to deal with inflation
• help free up labour markets (reduce union power)

Question 3

What did Gordon Brown do and why?

Answer 3

• made the Bank of England independent (1997)
• stopped the BofE from being used as a political weapon

Question 4

What did David Cameron focus on and how did he do it?

Answer 4

• lowering the budget deficit
• austerity (cutting government spending and increasing taxes)

Question 5

What did Theresa May struggle with and what did she focus on?

Answer 5

• Brexit
• focused on stimulating the UK economy due to the difficulty of leaving the EU

Question 6

What did Boris Johnson do?

Answer 6

• struggled with Covid 19

Question 7

Who was Gordon Brown?

Answer 7

The chancellor exchequer for Tony Blair, and then later became prime minister

Question 8

What does the Chancellor exchequer do?

Answer 8

Manage financial policies

Question 9

When was Tony Blair Prime minister?

Answer 9

1997-2007

Question 10

When was Gordon Brown chancellor exchequer and when was he prime minister?

Answer 10

Chancellor exchequer
- 1997-2007

Prime minister
- 2007-2010

Question 11

What party was Gordon Brown and Tony Blair?

Answer 11

Labour

Question 12

Which prime ministers were part of the conservative party?

Answer 12

Margaret Thatcher, David Cameron, Theresa May, Boris Johnson, Liz Truss and Rishi Sunak

Question 13

What is the order of the prime ministers?

Answer 13

Thatcher, tony blair, gordon brown, david cameron, theresa may, boris johnson, liz truss, rishi sunak

Question 14

What did Rishi Sunak do?

Answer 14

The furlough scheme

Question 15

What are the two types of policies that the government can use?

Answer 15

Demand side and supply side

Question 16

What is the conflict with using expansionary policies?

Answer 16

• reduce unemployment and create jobs
  BUT
• risks inflation

Question 17

What is the conflict with contractionary policies?

Answer 17

• reduce inflation
  BUT
• risk a hard landing (leading to unemployment)

Question 18

What does the phillips curve show?

Answer 18

An inverse relationship between unemployment and inflation

Question 19

What did Phillips argue that the curve showed?

Answer 19

A menu of choice, so if we want to get unemployment down we need to accept inflation

Question 20

What was Friedmans conclusion on the Phillips curve?

Answer 20

• an increase in AD will lower unemployment
• the increase in demand for goods/services will lead to inflation
• unemployment will return back to NRU once expectations for inflation adjust
• so we reach a new short run Phillips curve, at a higher rate of inflation
• people now act in a way that is expecting of more inflation, so it does not increase