A government announces an income tax cut and an increase in government spending. The table shows the government's finances and the forecast changes caused by the package.
| Item | Before the package | Forecast change |
|---|---|---|
| Total government revenue | £710bn | Decrease of £12bn |
| Total government spending | £700bn | Increase of £18bn |
Which outcome would follow from the policy package?
Total spending in the economy falls and the budget moves from a surplus to a deficit
Total spending in the economy rises and the budget moves from a surplus to a deficit
Total spending in the economy rises and the budget remains in surplus
Total spending in the economy falls and the budget remains in surplus
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.