51ºÚÁÏ

Candidates will investigate government macroeconomic policy objectives and the three main types of policy available with which to meet these objectives: fiscal, monetary and supply-side policy. Candidates will consider what constitutes expansionary policy and contractionary policy and when it is appropriate to use each policy. They will also analyse the impact of each policy on the main macroeconomic performance indicators. The key concepts used here will be: the margin and decision-making; time; equilibrium and disequilibrium; progress and development.

5.1 Government macroeconomic policy objectives
5.1.1 use of government policy to achieve macroeconomic objectives: price stability, low unemployment,economic growth (policy conflicts and trade-offs are not required)
5.2 Fiscal policy
5.2.1 meaning of government budget
5.2.2 distinction between a government budget deficit and a government budget surplus
5.2.3 meaning and significance of the national debt
5.2.4 taxation:• types of taxes: direct/indirect, progressive/regressive/proportional• rates of tax: marginal and average rates of taxation (mrt, art)• reasons for taxation
5.2.5 government spending:• types of spending: capital (investment) and current• reasons for government spending
5.2.6 distinction between expansionary and contractionary fiscal policy
5.2.7 AD/AS analysis of the impact of expansionary and contractionary fiscal policy on the equilibrium level of national income and the level of real output, the price level and employment
5.3 Monetary policy
5.3.1 definition of monetary policy
5.3.2 tools of monetary policy: interest rates, money supply and credit regulations
5.3.3 distinction between expansionary and contractionary monetary policy
5.3.4 AD/AS analysis of the impact of expansionary and contractionary monetary policy on the equilibrium national income and the level of real output, the price level and employment
5.4 Supply-side policy
5.4.1 meaning of supply-side policy, in terms of its effect on LRAS curves
5.4.2 objectives of supply-side policy: increasing productivity and productive capacity
5.4.3 tools of supply-side policy, for example training, infrastructure development, support for technological improvement
5.4.4 AD/AS analysis of the impact of supply-side policy on the equilibrium national income and the level of real output, the price level and employment