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2.3 How the government manages the economy

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Question 45

A government forecasts its annual budget with and without a planned cut in corporation tax.

ForecastGovernment revenueGovernment spending
Without the tax cut£920 billion£940 billion
With the tax cut£906 billion£940 billion
a.

Calculate the forecast increase in the annual budget deficit caused by the tax cut.

[2]
b.

Explain one way the tax cut could affect the government's ability to fund public services.

[2]
Markscheme

2.3 How the government manages the economy Questions

  1. GCSE
  2. /Economics
  3. /2.3 How the government manages the economy

104 exam-style questions on AQA GCSE Economics 2.3 How the government manages the economy, covering 2.3.1a Fiscal policy and income and expenditure, 2.3.1b Fiscal policy and government objectives, 2.3.1c The government budget, 2.3.2a The meaning of monetary policy, 2.3.2b Uses of monetary policy, 2.3.3a Supply-side policies and their trade-offs, 2.3.3b Using supply-side policies, and 2.3.4 Policies to correct positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.

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