Skip to main content

4.7 What is the role of the state in promoting growth and development?

What students need to learn:


Content
Students should be able to:
Additional Guidance Notes
Macro economic policies
Evaluate the use of policies to achieve economic objectives including macroeconomic stability. For example, how fiscal policy is used to achieve budgetary objectives; the role of independent central banks to achieve inflation targets; the use of supply-side policies to achieve economic growth.
Students should have an understanding of global factors influencing a country’s inflation rate; for example the impact of low wages in developing countries or the impact of a rise in commodity prices.

The AD/AS model introduced in Unit 2 should be applied in analysing and evaluating these policies. The distinction between short and long run aggregate supply curves should be considered, as well as the factors influencing each.

Students should be aware of the problems facing policy makers when applying policies, for example inaccurate information; risks and uncertainties.
Public expenditure
Give reasons for the changing size and pattern of public expenditure in different countries.

Examine how the state might tax revenues to improve human capital.
Students should understand the significance of differences in tax structures; public expenditure and public finances between countries. For example, students might examine the significance
of the differences of the size of the state sector between a developed economy such as the UK and a developing economy such as Malaysia.
Taxation
Understand taxation: direct and indirect; progressive, proportional and regressive taxes.

Understand how governments might use pubic expenditure and taxation to reduce poverty.
Students should understand the possible link between changes in tax rates and tax revenues.
Public sector borrowing and
Public sector debt
Understand the significance of the size of public sector borrowing and debt.
Students should understand the significance of differences in the state of public finances between countries, for example with respect to attractiveness to foreign direct investment and incentives.

Popular posts from this blog

Factors of Production and their Rewards

Type Definition Reward Land Labour Capital Enterprise All natural resources The physical and mental works of people All man made tools and machines All managers and organizers Rent Salary/Wage Interest Profit/Loss

Factors Affecting Geographical Mobility of Labour

Geographical Mobility of Labour refers to the movement of workers from one place to another place.  It depends upon; ·     cost of housing ·     cost of relocation ·     availability of social amenities ·     family ties etc

Factors Affecting Occupational Mobility of Labour

Occupational Mobility of Labour refers to the movement of workers from one occupation to another occupation. It depends upon; ·     the facilities for training and retraining ·     wage differentials ·     job security ·     future prospects ·     fringe benefits etc