International Conpetitveness

Question 1

Fiscal policy - gov spending (2)

Answer 1

Training + subsidise firms = increase productivity
But .. firms become reliant on subsidy

Question 2

Fiscal policy - tax

Answer 2

Incentive to work if tax falls but less revenue

Question 3

Monetary policy (2)

Answer 3

Reduce interest rates = increased investment + borrowing
But…. Inflation + WPIDEC = loose hot money flows

Question 4

Exchange rate policy (4)

Answer 4

Reduce IR = WPIDEc = uk is an import nation = Cost push inflation

Question 5

Supply side policy (2)

Answer 5

Lower national minimum wage = lower unit labour costs
But… inequality + exploitation

Question 6

Application - Corporation tax (3)

Answer 6

21% to 19%
Lowest in G20 = top 20 economies in world
Increase inward investment

Question 7

Application - red tape challenge (4+)

Answer 7

Lower regulation
Cheaper to meet environmental targets
Creates jobs = increased investment
BUT…. BREXIT = increased regulation and reduced comp. Through tariffs