What students need to learn:
Content
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Students should be able to:
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Additional Guidance Notes
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Demand-side policies
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Understand the practical application of monetary and fiscal policy,
for example inflation targeting; the role of the Bank of England’s Monetary Policy
Committee; the impact of budget deficits on aggregate demand.
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A diagrammatic treatment is required, using AD/AS analysis. Students
require knowledge of how the Bank of England’s
Monetary Policy Committee in the UK operates; the factors it takes
into consideration when making its decisions; the problems in determining the
magnitude of the effects of these policies.
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Supply-side policies
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Identify measures that are used to increase the productivity of factors,
such as education and training; measures to increase incentives, such as
changing the levels of benefits; cutting the costs of bureaucracy in firms.
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A diagrammatic treatment is required, using AD/AS analysis. The
difficulty in operating supply-side policies without an impact on aggregate
demand is a useful tool for evaluation. Students need to know the problems in
determining the magnitude of the effects of these policies.
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