Q BankQuestion BankDocsDocuments

4. Government and the macroeconomy

Syllabus
0455–2027–2028
Section
4
Level
—

Exam analysis

No tagged past-paper evidence yet

Published Concept pages under this syllabus area do not have tagged past-paper appearances in the selected level yet.

Recent 5 years

In this section

Topic 4.1

4.1. Government macroeconomic intervention

Objectives in this topic

4.1.1—Macroeconomic aims

  • the macroeconomic aims of government:
  • economic growth
  • full employment/low unemployment
  • stable prices/low inflation
  • balance of payments stability
  • redistribution of income
  • environmental sustainability
  • reasons behind the choice of aims and the criteria that governments may set for meeting each aim
  • possible conflicts between macroeconomic aims:
  • full employment and stable prices
  • economic growth and environmental sustainability
  • full employment and balance of payments stability

Topic 4.2

4.2. Fiscal policy

Objectives in this topic

4.2.1—Government budget

  • definitions of:
  • government budget
  • government budget deficit
  • government budget surplus
  • calculations of the size of a government budget deficit/surplus

4.2.2—Reasons for government spending

  • main areas of government spending and the reasons for and effects of spending in these areas

4.2.3—Taxation

  • reasons for taxation: raising revenue, discouraging consumption of demerit goods, reducing imports, redistributing income, influencing total demand, encouraging environmental sustainability
  • examples of the different classifications of tax: progressive, regressive, proportional; direct, indirect
  • impact of taxation on consumers, workers, producers/firms, the government and the economy

4.2.4—Definition of fiscal policy

  • Definition of fiscal policy

4.2.5—Fiscal policy measures

  • changes in:
  • taxes
  • government spending

4.2.6—Effects of fiscal policy on government macroeconomic aims

  • how fiscal policy measures may enable a government to achieve its macroeconomic aims

Topic 4.3

4.3. Monetary policy

Objectives in this topic

4.3.1—Definitions of money supply and monetary policy

  • Definitions of money supply and monetary policy

4.3.2—Monetary policy measures

  • changes in:
  • interest rate
  • money supply
  • foreign exchange rate

4.3.3—Effect of monetary policy on government macroeconomic aims

  • how monetary policy measures may enable a government to achieve its macroeconomic aims

Topic 4.4

4.4. Supply-side policy

Objectives in this topic

4.4.1—Definition of supply-side policy

  • Definition of supply-side policy

4.4.2—Supply-side policy measures

  • education and training
  • infrastructure spending
  • labour market reforms
  • lower direct taxes
  • deregulation
  • improving incentives to work and invest
  • privatisation

4.4.3—Effects of supply-side policy measures on government macroeconomic aims

  • how supply-side policy measures may enable a government to achieve its macroeconomic aims

Topic 4.5

4.5. Economic growth

Objectives in this topic

4.5.1—Definition of economic growth

  • Definition of economic growth

4.5.2—Measurement of economic growth

  • real Gross Domestic Product (GDP)

4.5.3—Causes and consequences of economic growth

  • how economic growth may be caused by an increase in total demand, an increase in the quantity of resources or an increase in the quality of resources
  • advantages and disadvantages of economic growth

4.5.4—Causes and consequences of recession

  • definition of recession
  • how a recession may be caused by a decrease in total demand, a decrease in the quantity of resources or a decrease in the quality of resources
  • consequences of recession for consumers, workers, producers/firms and the government

4.5.5—Policies to promote economic growth

  • the range of policies available to promote economic growth and their effectiveness

Topic 4.6

4.6. Employment and unemployment

Objectives in this topic

4.6.1—Definitions of employment, unemployment and full employment

  • Definitions of employment, unemployment and full employment

4.6.2—Measurement of unemployment

  • how unemployment is measured (labour force survey)
  • formula for the unemployment rate

4.6.3—Causes/types of unemployment

  • frictional unemployment
  • structural unemployment
  • cyclical unemployment
  • seasonal unemployment

4.6.4—Consequences of unemployment

  • consequences of unemployment for the individual, producers/firms, the government and the economy

4.6.5—Policies to reduce unemployment

  • the range of policies available to reduce unemployment and their effectiveness

Topic 4.7

4.7. Inflation

Objectives in this topic

4.7.1—Definitions of inflation and deflation

  • Definitions of inflation and deflation

4.7.2—Measurement of inflation

  • measurement of inflation using the Consumer Prices Index (CPI)

4.7.3—Causes of inflation

  • demand-pull
  • cost-push

4.7.4—Consequences of inflation

  • how inflation affects savers, lenders and borrowers
  • consequences of inflation for consumers, workers, producers/firms and the economy

4.7.5—Policies to control inflation

  • the range of policies available to control inflation and their effectiveness
ConceptIGCSE Economics