The role of the government

Question 1

Give the 3 roles of the government

Answer 1

International role
National role
Local role

Question 2

Give the 5 macroeconomic aims

Answer 2

Economic Growth
Low unemployment
Low Inflation
BoP stability
Redistribution of income

Question 3

Give the difference between GDP and real GDP

Answer 3

GDP measures the monetary value of goods and services of a country in a year.
Real GDP measures the monetary value of goods and services of a country in a year, but is adjusted to inflation

Question 3

Define Economic Growth

Answer 3

An increase in the level of national output

Question 4

Explain 3 causes of economic growth

Answer 4

Factor endowments - countries with natural resources tend to specialise and produce on a large scale, allowing them to achieve economies of scale.

The labour force - Economic growth can occur based on the size, skills and mobility of labour

High labour productivity

Investment expenditure

Question 5

Give 3 positive effects of economic growth

Answer 5

Increased living standards
Increased tax revenue
Increased employment

Question 6

Give 3 negative effects of economic growth

Answer 6

Risk of inflation
Environmental damage
Inequalities in income and wealth

Question 7

Give the conflicts between macroeconomic aims

Answer 7

Economic growth and low inflation
Low unemployment and low inflation
Economic growth and BoP stability
Low unemployment and BoP stability