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2.5 Fiscal policy and supply-side policies

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Question 53

The table below shows the fiscal position of an economy over two consecutive years:

YearReal GDP (£ billion)Government Expenditure (£ billion)Tax Revenue (£ billion)Year 1500200190Year 2450215165 \begin{array}{|c|c|c|c|} \hline \text{Year} & \text{Real GDP (£ billion)} & \text{Government Expenditure (£ billion)} & \text{Tax Revenue (£ billion)} \\ \hline \text{Year 1} & 500 & 200 & 190 \\ \hline \text{Year 2} & 450 & 215 & 165 \\ \hline \end{array} YearYear 1Year 2​Real GDP (£ billion)500450​Government Expenditure (£ billion)200215​Tax Revenue (£ billion)190165​​

During Year 2, the government made no discretionary changes to tax rates or entitlement criteria for welfare benefits. The change in the government's budget balance between Year 1 and Year 2 is an example of:

A

discretionary expansionary fiscal policy.

B

the operation of automatic stabilisers during an economic downturn.

C

discretionary contractionary fiscal policy.

D

the implementation of contractionary monetary policy.

Markscheme

2.5 Fiscal policy and supply-side policies Questions

  1. A Level
  2. /Economics
  3. /2.5 Fiscal policy and supply-side policies

245 exam-style questions on AQA A Level Economics 2.5 Fiscal policy and supply-side policies, covering 2.5.1 Fiscal policy and 2.5.2 Supply-side policies. Each one has a worked solution and a mark scheme showing where the marks go.

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