Download role of the government

ROLE OF THE
GOVERNMENT
AIMS OF THE GOVERNMENT
1.Create Full Employment
2.Control Inflation
3.Achieve Equilibrium of Balance of Trade
4.Control Government Finances
5.Achieve a Just Social Policy
6.Provision of Adequate National Infrastructure
7.Achievement of National Growth
8.Regional Development
**usually asked when this section comes up**
Policies used by the
Government
-Fiscal : expenditure & taxation
-Monetary : supply of money, interest rates & credit
creation.
-Exchange rate : devaluing or revaluing the currency in
terms of other currencies
-Direct intervention : setting up semi-state bodies to
provide goods and services in the open market
-Deregulation : changing of laws and practices which are
determined to competition.
-Prices & Income : gov implements price controls to
freeze or limit wage increases
-Economic planning : consultations with social partners
to achieve realistic economic targets
CREATE FULL EMPLOYMENT
Why??
 Income for government
 Less exp
 Less social cost
 More spending in economy
Note 0% employment in not
achievable
How??
 Fiscal: reduce tax to
encourage spending
 Monetary: reduce interest to
encourage investment
 Exchange rate: reduce
value of currency to
stimulate exports
 Direct intervention: increase
jobs in public sector
CONTROL INFLATION
Why??
 Stabilise cost of living
 Prevent wage
increases
 Keep Irish industry
competitive
How??
 Fiscal: increase tax to
reduce demand
 Monetary: increase
interest rates to
decrease demand for
loans
 Price and incomes:
impose wage freezes &
impose price control
orders
ACHIEVE EQULIBRIUM OF
BALANCE OF TRADE
Why??
 Keep the value of imports
balanced
 Exports equal to each other
 Maintains employment,
production & standards of
living
How??
 Fiscal: increase taxes to
lower income-decreasing
demand for imports
 Monetary: increase interest
rates on loans - less money
available to be spent on
imports
 Exchange rate: devalue
currency – cheaper exports
and more expensive inports
CONTROL OF GOVERNMENT
FINANCES
Why??
 Reduce national debt
 Reduce cost of
servicing debt
 Make better use of
resources
 Reduce taxes
 Use surplus money to
provide better services
How??
 Fiscal: decrease exp &
gov borrowing
ACHIEVE A JUST SOCIAL
POLICY
Why??
 Without infrastructure
the provision of goods
and services could not
take place
How??
 Fiscal: implement a
progressive income tax
policy & increase social
welfare
THE PROVISION OF ADEQUATE
NATIONAL INFRASTRUCTURE
Why??
 Without infrastructure
the provision of goods
& services could not
take place efficiently
How??
 Direct intervention: cooperate with private
enterprise in the
provision of facilities
such as telephone
services
 Fiscal: increase gov
sending on
infrastructure.eg.
Schools & hospitals
REGIONAL DEVELOPMENT
Why??
 Ensure all regions of
the country share in the
wealth
 All the population has
an adequate
infrastructure suited to
their needs
How??
 Fiscal: ensure the
payment of higher
grants to companies
setting up in
disadvantaged areas
ACHIEVEMENT OF ECONOMIC
GROWTH
Why??
 Economic growth is
aimed at increasing the
average income per
head of the population
How??
 Economic planning:
negotiate with social
partners to set up
realistic targets for
growth
 Monetary: ensure that
the money supply is
adequate when needed
CONFLICTS BETWEEN
GOVERNMENT AIMS
1. Full employment ~ control of inflation,
balance of payments & control of gov
finances
2. Control of gov finances ~ provision of
infrastructure, just social policy &full
employment
3. Economic growth~ just social policy & control
of inflation
**usually asked when this section comes up**
NEW GOVERNMENT
INVESTMENTS
New schools
Permission has been given by the government
for the building of 40 new schools around the
country.
 New children’s hospital
A new children’s hospital will be built over the
next few years.
*as a result of findings in the 2011 census.

PRIVATISATION= the sale of state owned
companies to the private sector
Advantages
1. Raise money for the
government
2. Many state bodies are
supported by taxation,
their sale will result in
less need for higher
taxation
3. Gives Irish people the
opportunity to invest in
the Irish economy.
Disadvantages
1. New companies could
fall into foreign control
2. May reduce labour
force
3. Could discontinue
services to society that
are non-profitable
NATIONALISATION= the process of a national
government acquiring the ownership of o private
business/industry.
Advantages
1. Ensure continuity of essential services.
100,000 new jobs by 2016
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The Government has
designed a plan to promote
the creation of 100,000 jobs
over the next four years.
The Action Plan for Jobs
2012 seeks to help
companies expand their
scope for exporting goods;
provide credit to small and
medium sized enterprises;
improve competitiveness;
and attract more
international investment to
Ireland


- A €150 million
Development Capital
Scheme which will offer
supports for small and
medium-sized businesses
with the potential to create
jobs that are struggling to
access credit
- The extension of the
corporation tax exemption
for start-up companies until
2014
EXAM QUESTIONS
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2010 higher level
2009 higher level
2008 higher
2007 higher
2006 higher
2011 ordinary
2008 ordinary level
2007 ordinary
2006 ordinary level
2004 ordinary
EXAM QUESTIONS
CONTINUED
2009 higher level:‘The Irish government should encourage
1.
2.
3.
4.
initiatives that will prevent further cost increases and in turn
sustain employment in small firms’.Suggest with reasons two
actions the government could take to improve the competitiveness
of small firms.
Reduce the minimum wage
Reduce taxation
Develop infrastructure
Subsidies to firms