Economics 0455 · IGCSE · The macroeconomic aims of government
The macroeconomic aims of government — practice question
In 2023, India became the most populous country. This could influence the government’s macroeconomic objectives. In 2018, the Indian Government reduced the corporation (corporate income) tax rate from 35% to 25%. From 2019 to 2022, India’s inflation rate averaged 6%. Some economists argued that, if the government wanted to meet its central inflation target, it ought to reduce its spending.
(a)[2]
Identify two government macroeconomic aims that can conflict.
(b)[4]
Explain two reasons why population growth in a country may be high.
(c)[6]
Analyse how a reduction in the corporation (corporate income) tax rate can promote economic growth.
(d)[8]
Discuss whether a fall in government spending will lower inflation or not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Full employment / low unemployment in conflict with price stability” …