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2.3 How the government manages the economy

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Question 52

The central bank of a fictional economy is considering reducing the base rate from 4.5% to 3.0%. Table 1 shows recent economic data and the results of two surveys.

IndicatorOne year agoLatest
Real GDP growth1.5%0.1%
Unemployment rate4.8%6.1%
Households planning a major purchase32%18%
Firms planning to increase investment36%14%

Using Table 1, analyse why the proposed interest rate cut may be less successful than the central bank hopes in achieving faster economic growth and more employment.

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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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