Government Influence

Question 1

Examples of Government Economic Objectives

Answer 1

Control inflation
Full employment
Economic growth
The balance of payments and exchange rates

Question 2

Monetary Policy

Answer 2

Designed to control the amount of money following around the economy.
Mainly used to tackle inflation and balance of payment problems.
One main way of control is through interest rates.

Question 3

Effect of increasing Interest Rates

Answer 3

May reduce the amount of borrowing, because borrowing will be more expensive. So amount of money flowing will be reduced.

Question 4

Fiscal Policy

Answer 4

Manage the level of ‘total spending’ in the economy.