Economics 0455 · IGCSE · The macroeconomic aims of government
The macroeconomic aims of government — practice question
A central bank or a government has several policy options that can be used to cut unemployment. One measure a government could choose is to raise spending on house construction. The Federal Reserve, the central bank of the US, has two main aims: keeping prices stable and achieving full employment. Some central banks also set economic growth as an objective, but no central bank uses HDI value as a target.
(a)[2]
Identify two policy measures a central bank could use to keep prices stable.
(b)[4]
Explain two benefits of full employment to an economy.
(c)[6]
Analyse how higher government spending on house building could lower unemployment.
(d)[8]
Discuss whether or not a rise in a country’s economic growth rate will increase its HDI value.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Interest rate” …