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24: Government economic objectives and policies
Revision checklist Exam practice questions
● Economic growth, healthy balance 1 The unemployment rate in Country A has risen from 4.5%
of payment, low inflation and low to 7.2% in the past year, the infl ation is said to have gone up
unemployment are the key economic and the GDP is decreasing. The economy of Country A is
objectives of any government. said to be in recession. Country A is a very small country
● Governments aim to achieve these economic and relies heavily on imports from other countries.
objectives by changes to tax and interest
rates and also by controlling how much they a What is meant by ‘recession’? [2]
spend on public services.
b Identify two features of a decreasing GDP. [2]
● There are four stages in the business cycle:
c Identify and explain two types of taxes that retail
growth, boom, recession and slump. These
can affect the economic objectives and businesses in Country A may have to pay. [4]
policies of a government.
d Identify and explain two effects that the economic
recession may have on a manufacturing company in
Country A.
Effect 1:
Explanation:
Effect 2:
Explanation:
[6]
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e Explain two ways that the government of Country
A can help stimulate growth in the economy.
Recommend which way should be used. Justify
your answer.
Way 1:
Explanation:
Way 2:
Explanation:
Recommendation:
[6]
2 Country Z is a growing economy with an increasing
GDP and a healthy balance of payments. The country’s
success depends on exports of sugar, textiles and
tourism. However, due to lack of natural resources,
Country Z is heavily dependent upon imports of fuels for
its energy needs. The government of Country Z wants
to accelerate economic growth further to be able to
meet all its economic objectives. The government is also
considering ways to attract more investment from both
local and foreign companies.
