Economics 0455 · IGCSE · The macroeconomic aims of government
The macroeconomic aims of government — practice question
In 2015, the UK economy saw output rise and unemployment remain fairly low. Even so, labour productivity and earnings increased only slightly. The government was still spending more than it took in tax revenue, and it was thinking about altering some monetary policy measures.
(a)[2]
Identify two factors that lead to inflation.
(b)[4]
Explain two reasons why government spending may be higher than tax revenue.
(c)[6]
Analyse how an increase in labour productivity may raise living standards.
(d)[8]
Discuss whether monetary policy measures are able to increase economic growth.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Demand-pull inflation” …