2 AIMS OF THE GOVERNMENT 1.Create Full Employment 2.Control Inflation 3.Achieve Equilibrium of Balance of Trade4.Control Government Finances5.Achieve a Just Social Policy6.Provision of Adequate National Infrastructure7.Achievement of National Growth8.Regional Development**usually asked when this section comes up**
3 Policies used by the Government -Fiscal : expenditure & taxation-Monetary : supply of money, interest rates & credit creation.-Exchange rate : devaluing or revaluing the currency in terms of other currencies-Direct intervention : setting up semi-state bodies to provide goods and services in the open market-Deregulation : changing of laws and practices which are determined to competition.-Prices & Income : gov implements price controls to freeze or limit wage increases-Economic planning : consultations with social partners to achieve realistic economic targets
4 CREATE FULL EMPLOYMENT Why??Income for governmentLess expLess social costMore spending in economyNote 0% employment in not achievableHow??Fiscal: reduce tax to encourage spendingMonetary: reduce interest to encourage investmentExchange rate: reduce value of currency to stimulate exportsDirect intervention: increase jobs in public sector
5 CONTROL INFLATION Why?? Stabilise cost of living Prevent wage increasesKeep Irish industry competitiveHow??Fiscal: increase tax to reduce demandMonetary: increase interest rates to decrease demand for loansPrice and incomes: impose wage freezes & impose price control orders
6 ACHIEVE EQULIBRIUM OF BALANCE OF TRADE Why??Keep the value of imports balancedExports equal to each otherMaintains employment, production & standards of livingHow??Fiscal: increase taxes to lower income-decreasing demand for importsMonetary: increase interest rates on loans - less money available to be spent on importsExchange rate: devalue currency – cheaper exports and more expensive inports
7 CONTROL OF GOVERNMENT FINANCES Why??Reduce national debtReduce cost of servicing debtMake better use of resourcesReduce taxesUse surplus money to provide better servicesHow??Fiscal: decrease exp & gov borrowing
8 ACHIEVE A JUST SOCIAL POLICY Why??Without infrastructure the provision of goods and services could not take placeHow??Fiscal: implement a progressive income tax policy & increase social welfare
9 THE PROVISION OF ADEQUATE NATIONAL INFRASTRUCTURE Why??Without infrastructure the provision of goods & services could not take place efficientlyHow??Direct intervention: co-operate with private enterprise in the provision of facilities such as telephone servicesFiscal: increase gov sending on infrastructure.eg. Schools & hospitals
10 REGIONAL DEVELOPMENT Why?? Ensure all regions of the country share in the wealthAll the population has an adequate infrastructure suited to their needsHow??Fiscal: ensure the payment of higher grants to companies setting up in disadvantaged areas
11 ACHIEVEMENT OF ECONOMIC GROWTH Why??Economic growth is aimed at increasing the average income per head of the populationHow??Economic planning: negotiate with social partners to set up realistic targets for growthMonetary: ensure that the money supply is adequate when needed
12 CONFLICTS BETWEEN GOVERNMENT AIMS 1. Full employment ~ control of inflation, balance of payments & control of gov finances2. Control of gov finances ~ provision of infrastructure, just social policy &full employment3. Economic growth~ just social policy & control of inflation**usually asked when this section comes up**
13 NEW GOVERNMENT INVESTMENTS New schoolsPermission has been given by the government for the building of 40 new schools around the country.New children’s hospitalA new children’s hospital will be built over the next few years.*as a result of findings in the 2011 census.
14 PRIVATISATION= the sale of state owned companies to the private sector AdvantagesRaise money for the governmentMany state bodies are supported by taxation, their sale will result in less need for higher taxationGives Irish people the opportunity to invest in the Irish economy.DisadvantagesNew companies could fall into foreign controlMay reduce labour forceCould discontinue services to society that are non-profitable
15 Ensure continuity of essential services. NATIONALISATION= the process of a national government acquiring the ownership of o private business/industry.AdvantagesEnsure continuity of essential services.
16 100,000 new jobs by 2016The Government has designed a plan to promote the creation of 100,000 jobs over the next four years.The Action Plan for Jobs 2012 seeks to help companies expand their scope for exporting goods; provide credit to small and medium sized enterprises; improve competitiveness; and attract more international investment to Ireland- A €150 million Development Capital Scheme which will offer supports for small and medium-sized businesses with the potential to create jobs that are struggling to access credit- The extension of the corporation tax exemption for start-up companies until 2014
18 EXAM QUESTIONS CONTINUED 2009 higher level:‘The Irish government should encourage initiatives that will prevent further cost increases and in turn sustain employment in small firms’.Suggest with reasons two actions the government could take to improve the competitiveness of small firms.Reduce the minimum wageReduce taxationDevelop infrastructureSubsidies to firms2