CAIE IGCSE Economics 4.2. Fiscal policy Question Bank
Practise using budgets, tax data and spending examples to explain how fiscal policy affects growth, jobs and inflation.
- Syllabus
- 2027–2029
- Course
- Economics 0455
Exam points
- calculate a budget deficit or indirect tax revenue from government finance data
- classify fiscal policy as changes in taxation and government spending
- analyse how spending cuts or housebuilding programmes affect inflation and unemployment
Covered syllabus points
4.2. Fiscal policy question 1
The food processing, tourism, and education industries all contribute significantly to the government budget for the US state of Wisconsin. The contribution of the education industry is higher than that of other industries due to the higher wages earned in education. This industry also contributes to the population growth of the state. This not only creates private benefits but also external benefits.
Define government budget.
4.2. Fiscal policy question 2
Free goods and economic goods are consumed in Poland. In 2020, demand for both economic goods and factors of production increased in Poland. For example, Polish consumers demanded more football shirts and the Polish government increased its spending on housing for the country's population.
Discuss whether or not an increase in government spending on housing would benefit an economy.
4.2. Fiscal policy question 3
Digital money, such as cryptocurrencies, is increasingly being used. Digital money transactions take place on electronic devices such as computers and smartphones. However, there can be market failure due to external costs arising from high energy usage of non-renewable sources. One way of reducing external costs is to tax the product.
Identify two types of tax.
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