Government and the macroeconomy - Government macroeconomic intervention (3)

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1.

The UK government is concerned about high unemployment. It is considering using expansionary fiscal policy to boost the economy. Discuss the potential benefits and drawbacks of this approach in relation to the UK's balance of payments. (12 marks)

2.

Explain how a government might try to achieve both full employment and stable prices simultaneously. Discuss the limitations of these approaches.

3.

The government of a country aims to achieve both full employment and stable prices. Explain, with examples, the potential conflicts that can arise between these two macroeconomic aims.