Eduqas A Level Economics
Eduqas A Level Economics Government Policy Objectives Exam Questions
Free Eduqas A Level Economics revision for Government Policy Objectives: what you need to know, common mistakes and exam-style questions with answers. Covers the main macroeconomic objectives of government, how they are measured, possible conflicts between objectives and the trade-offs policymakers face.
Practise Government Policy Objectives with past papers
Once you have learnt this topic, find the Government Policy Objectives questions in real Eduqas A Level Economics past papers and mark them with the mark scheme. Doing lots of real questions is the quickest way to learn how examiners ask about each idea.
About Eduqas A Level Economics Government Policy Objectives
Government policy objectives opens the macroeconomic objectives area of the Eduqas specification. You need to know the main objectives a UK government pursues: sustainable economic growth, low unemployment, low and stable inflation, a sustainable balance of payments position, and control of the national debt, along with wider aims such as a fair distribution of income and environmental protection. The key skill is explaining conflicts between objectives, for example between growth and inflation or growth and the current account, and judging which matters most at a given time. This topic sets up the detailed sections on each objective and is regularly drawn on in Component 2 data response questions and Component 3 macro essays.
What you need to know
- Main objectives Strong and sustainable economic growth, low unemployment (high employment), low and stable inflation, a sustainable balance of payments on current account, and controlling the national (public sector) debt.
- Wider objectives Governments may also aim for a more equal distribution of income and wealth, environmental sustainability, and balanced regional growth.
- Inflation target The UK government sets an inflation target which the Bank of England aims to meet. The target is symmetrical, so inflation below target is treated as seriously as inflation above it.
- Measuring performance Growth is measured by the percentage change in real GDP, unemployment by the ILO Labour Force Survey measure and the claimant count, inflation by the CPI, and the external position by the current account balance as a percentage of GDP.
- Conflicts between objectives Rapid growth can raise inflation and widen the current account deficit as imports rise. Reducing inflation with higher interest rates can raise unemployment (the short run Phillips curve trade-off). Cutting borrowing may slow growth.
- Complementary objectives Some objectives support each other: growth reduces cyclical unemployment and raises tax revenue, helping control the national debt.
Common mistakes in Government Policy Objectives
- Treating every objective as equally important at all times. Explain which objective is the priority in the current context and why.
- Stating growth as the objective without the word sustainable. Governments aim for sustainable growth that does not create inflation or environmental damage.
- Describing conflicts without explaining the mechanism. Show the chain, for example: growth raises incomes, which increases imports, which worsens the current account.
- Assuming the government aims for zero inflation. The aim is low and stable inflation around a target, and deflation is also undesirable.
Try three Government Policy Objectives exam-style questions
1. State three macroeconomic objectives of the UK government. (3 marks)
Show the mark scheme answer
Any three from: sustainable economic growth; low unemployment; low and stable inflation; sustainable current account position; control of the national debt; fair distribution of income.
2. Explain why there may be a conflict between economic growth and a sustainable current account position. (4 marks)
Show the mark scheme answer
Rapid growth raises household incomes; consumers spend more, including on imports (UK has a high marginal propensity to import); domestic producers may divert output from exports to the home market; so the current account deficit widens.
3. Explain why the UK inflation target is described as symmetrical. (2 marks)
Show the mark scheme answer
The Bank of England treats deviations below the target as seriously as deviations above it; so it acts to raise inflation that is too low as well as to reduce inflation that is too high.
Government Policy Objectives FAQs
What does Eduqas A Level Economics Government Policy Objectives cover?
It covers the main macroeconomic objectives of the UK government, how performance against them is measured, and the conflicts and trade-offs between them.
How does this topic link to the rest of macroeconomics?
It introduces the objectives covered in detail in the growth, unemployment, inflation, balance of payments and national debt topics, and it is the yardstick for judging fiscal, monetary and supply side policy.
How do I evaluate conflicts between objectives?
Consider the size of any trade-off, the time period, the state of the economy (spare capacity or not) and which policy is used. Supply side policies can sometimes achieve several objectives at once.
