Download Slide 1

SECTION 1
MANAGING THE
ECONOMY
GCSE ECONOMICS: UNIT 12
Managing the economy
Fiscal & Monetary Policy
SECTION 1
MANAGING THE
ECONOMY
Learning Objectives
• Understand how the government uses
Fiscal Policy to achieve its economic
objectives
• Analyse how the Bank of England uses
Monetary Policy to help control inflation
SECTION 1
MANAGING THE
ECONOMY
Links with previous lessons…
•
If you recall from our work on the economic cycle, the
government would ideally like real GDP to grow at (or as
close to) the trend rate- why is this?
A.
If this can be achieved
then growth is more
sustainable, the level
of unemployment
remains low, inflation
is low and stable and
there is a greater
chance of a balance
of payments
SECTION 1
MANAGING THE
ECONOMY
Fiscal Policy introduced…
•
Achieving a smooth(er) economic cycle is easier said than
done!
•
Fiscal policy is one tool the UK government can use to
combat the cyclical nature of real GDP and help smooth the
economic cycle (i.e. achieve it’s economic objectives)
•
Fiscal policy includes both government taxation (both direct
and indirect) and government expenditure
•
Fiscal policy can therefore have a huge impact on people’s
incomes and therefore their incentive to spend
SECTION 1
MANAGING THE
ECONOMY
Fiscal Policy in The Budget
• Each year the incumbent government reviews its
fiscal policy, setting out the level
level of taxation and spending
in The Budget for the year(s) ahead
• Open the document called
The Budget & Fiscal Policy and
summarise the changes to
government taxation and spending
in the latest budget
SECTION 1
MANAGING THE
ECONOMY
• Gimme 5 things you know about the Bank of
England!
• You have 5 minutes to use the internet (if you need
it!)
SECTION 1
MANAGING THE
ECONOMY
Monetary Policy
• In small groups produce a mini-slideshow which covers the following;
1. Who are the BOE?
2. What are the objectives of the BOE?
3. What is Monetary Policy?
4. How can Monetary Policy help to control inflation and economic
growth?
5. How have interest rates changed over the past 10 years (chart)?