Reduce Inflation. Flashcards

1
Q

what had happened to retail prices between 1973 and 1979

A

they had doubled

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what did inflation cause

A

eroded middle class savings, caused strikes, made industry exports overpriced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

how did Howe reduce the money in circulation, and when did this help to reduce inflation by

A

cutting welfare payments including housing- ‘monetarism’, and by 1983 this helped to reduce inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What did government expenditure rise by from 1979 and 1990?

A

13%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What did Howe do in 1980 in terms of direct tax?

A

reduced direct tax from 83% to 60% for the highest earners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what happened to the rate at which prices rose from 1979-1990?

A

decreased from 18% in 1980, to 4.5% by 1983
and never rose about 9% up to 1989

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

by 1982, what had happened to Britain’s growth rate and British industry?

A

began to show signs of recovery- although weaker businesses collapsed, strong ones thrived
British industry became more competitive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What did Chancellor Howe do to make him the ‘most unpopular in history’?

A

cut government expenditure in 1980 and 1981 budgets
reduced government borrowing
increased indirect taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What did Howe do in 1979 to tax and how did it impact, and what happened to VAT?

A

shifter taxation from direct to indirect taxation, but the VAT increase (from 8% to 15%) pushed up prices of goods which initially worsened inflation.
Indirect taxes impact what people buy rather than what they earn affecting lowest incomes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

how much did manufacturing output fall by, and what happened to firms?

A

14%, and many firms went bankrupt as government refused to help

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what happened to unemployment and what did this lead to?
what happened to the number of people under the poverty line?

A

more than doubled between 1979 and 1983 to over 3 million, which contributed to causing riots in Brixton in April 1981, and Liverpool in July 1981-places of high unemployment.
Between 1979-85 the number of people below the poverty line increased by 55% to 17% of the population.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what did happen to inflation by June 1989?
what did Lawson do in 1989 to try to control inflation, and what did it reach?

A

it crept up to 8.3% by June 1989.
Lawson in 1989 tried to control inflation by raising interest rates, and in October 1989 these had reached 15%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what was the counter argument to the idea that Howe’s deflationary policies caused the upturn in the economy?

A

the increase in North Sea oil production turned Britain into a net exporter of oil by 1980.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly