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CAIE IGCSE Economics 4.5.5 Policies to promote economic growth

Match the cause of weak growth to lower taxes or interest rates, greater lending, infrastructure, education or subsidies, then explain the path to higher real output.

Syllabus
2027–2029
Course
Economics 0455

Exam points

  • Explain how lower taxes or interest rates can raise spending, investment and aggregate demand.
  • Link infrastructure, education or industry subsidies to productivity and productive capacity.
  • Evaluate effectiveness using time lags, inflation, budget costs and the economy's spare capacity.

4.5.5—Policies to promote economic growth question 1

[Maximum number: 1]

The government wishes to increase economic growth in its economy. What would not be likely to achieve this aim?

A

The central bank encourages bank lending.

B

The central bank lowers interest rates.

C

The government increases sales tax (VAT).

D

The government subsidises new industries.

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