Thatcher's Economic Policy: Stage 2

Question 1

What did the government deem to be the most important economic factor to get control over?

Answer 1

Inflation

Question 2

What was interest raised to in order to combat inflation?

Answer 2

17%

Question 3

What was the downside of increasing interest rates?

Answer 3

It cost more for businesses to borrow money

Question 4

I) What, other than raising interest, did the government do to combat inflation in 1979?
II) What was the disadvantage of this?

Answer 4

I) Increased the value of the pound

II) It made exporting more expensive, and thus more difficult

Question 5

What was the overall effect of increased inflation in early 80s?

Answer 5

A decline in output and demand

Question 6

I) What did inflation rise to by May 1980?

II) Why?

Answer 6

I) 22%

II) a recession led to huge unemployment

Question 7

What did inflation fall to by 1986?

Answer 7

2.5%

Question 8

What led to the UK joining the ERM by the late 1980s?

Answer 8

Further recessions

Question 9

What does ERM stand for?

Answer 9

European Exchange Rate Mechanism

Question 10

Why was unemployment dealt with less in in Thatcher’s stage 2 economic policy?

Answer 10

Inflation was seen as more important to deal with than unemployment

Question 11

What was a key criticism of the privatisation of British businesses, and what was the theory behind this?

Answer 11

That the stocks were sold off at a cheaper cost than they should have been to make sure all of them were sold

Question 12

Was the economic state in the years 1990-1992 positive or negative overall?

Answer 12

Negative

Question 13

Was the economic state in the years 1992-1997 positive or negative overall?

Answer 13

Positive

Question 14

Give 3 indicators the economy was in a bad place by the end of 1990?

Answer 14

• Decline in manufacturing output
• High interests
• Rise in unemployment

Question 15

What was the main effect on homeowners in 1991-early 1992?

Answer 15

They entered negative equity. This was especially a problem for conservative voters

Question 16

What was a poor economic indicator in early 1992?

Answer 16

Government fell into high public spending and borrowing

Question 17

Where was particularly in need of public spending in 1992?

Answer 17

The NHS

Question 18

I) When was black Wednesday?

II) What happened on that day?

Answer 18

I) 16th September 1992

II) Britain left the ERM due to the collapsing value of the pound

Question 19

What was the major benefit to leaving the ERM?

Answer 19

Britain no longer ha to keep high interest rates

Question 20

Give 3 positive economic indicators between 1992-1997

Answer 20

• Unemployment slowed
• housing picked up
• Benefits caused by flexible working practices (Thanks to deregulation) were felt

Question 21

Why did world trade increase between 1992-1997?

Answer 21

America was also coming out of a recession

Question 22

What were 3 key parts of the economic state of the UK by 1997?

Answer 22

• Unemployment down
• Consumer spending (and car ownership) up
• productivity was up, though not a lot

Question 23

What was the 1986-1988 “Lawson boom”?

Answer 23

Rapid economic expansion due to Chancellor of the Exchequer Nigel Lawson

Question 24

I) When did the stock market crash after the “Big Bang”

II) Why?

Answer 24

I) 1987

II) Deregulation

Question 25

What was the GDP growth in the 1980s

Answer 25

2.2%

Question 26

What was the goal of the loan guarantee scheme?

Answer 26

To make it easier for businesses to get loans

Question 27

I) What did the Enterprise Allowance Scheme aim to do? | II) How?

Answer 27

I) Help unemployed people start businesses | II) Give them £40 a week for up to a year

Question 28

I) What was inflation at by 1990? | II) Was this higher or lower than it had been in 1980?

Answer 28

I) 10.9% | II) Higher

Question 29

What did did income tax drop to from 83% by 1988?

Answer 29

40%

Question 30

What had standard tax dropped to by 1988 from 33%?

Answer 30

25%

Question 31

Why did Thatcher dislike labour councils?

Answer 31

She thought they wasted a lot of money

Question 32

I)Which council was Thatcher's main conflict with? | II) Who was in charge of this council?

Answer 32

I) The Greater London Council | II) Ken Livingstone

Question 33

I) When was rate Capping introduced? | II) What was it?

Answer 33

I) 1985 | II) A limit on the amount a council could tax residents

Question 34

What did Sheffield and Liverpool councils do in protest of Rate Capping?

Answer 34

Refused to set a budget, but backed down due to the threat of bankruptcy

Question 35

I) When was the Local Government Act passed? | II) What did it do?

Answer 35

I) 1986 | II) Abolished the GLC and other Metropolitan local authorities

Question 36

What was the main argument against the Local Government Act?

Answer 36

Power was too centralised and as such it was less democratic

Question 37

Did Thatcher ever manage to reduce public spending?

Answer 37

No

Question 38

I) When does chancellor Nigel Lawson abandon his spending targets? I) Why was this a blow to his reputation?

Answer 38

I) 1986 | II) He was a staunch Thatcherite and so agreed cutting public spending was important

Question 39

When did Privatisation accelerate?

Answer 39

1984 with the sale of BT

Question 40

What were interest rates raised to in 1979?

Answer 40

17%

Question 41

What did Inflation rise to in 1980?

Answer 41

22%

Question 42

What did inflation fall to in 1986?

Answer 42

2.5%

Question 43

What did inflation rise to by 1990?

Answer 43

11%

Question 44

What was the effect of higher interests on businesses

Answer 44

Output and demand fell

Question 45

``` In just two years how was I) Manufacturing output II) Production in the west midlands III) Steel production effected? ```

Answer 45

I) Fell 15% II) Fell 25% III) Fell 30%

Question 46

How did Thatcher encourage the employment of younger workers?

Answer 46

The Youth Employment Scheme

Question 47

How high was unemployment until 1987?

Answer 47

3 Million

Question 48

What was a major external change that effected British industry?

Answer 48

Foreign competition and increasing globalisation

Question 49

What did Geoffrey Howe argue should be the fate of cities like Liverpool?

Answer 49

They should be subject to "managed decline"

Question 50

What is a result of the Economic alignment?

Answer 50

1981 riots in Brixton, Handsworth, Chapeltown and Toxteth

Question 51

What did the Scarman Report find to be the cause of the riots

Answer 51

Race, poverty and Unemployment

Question 52

Who led the regeneration of the deprived inner cities?

Answer 52

Michael Heseltine

Question 53

When were there further riots despite the repeal of the sus laws?

Answer 53

1985

Question 54

What becomes the second biggest financial district in the country thanks to Heseltine?

Answer 54

Canary Warf