SECTION 1 MANAGING THE ECONOMY Managing the economy GCSE ECONOMICS: UNIT 12 Fiscal & Monetary Policy

SECTION 1 MANAGING THE ECONOMY Learning Objectives Understand how the government uses Fiscal Policy to achieve its economic objectives Analyse how the Bank of England uses Monetary Policy to help control inflation

SECTION 1 MANAGING THE ECONOMY Links with previous lessons… If you recall from our work on the economic cycle, the government would ideally like real GDP to grow at (or as close to) the trend rate- why is this? A.If this can be achieved then growth is more sustainable, the level of unemployment remains low, inflation is low and stable and there is a greater chance of a balance of payments

SECTION 1 MANAGING THE ECONOMY Fiscal Policy introduced… Achieving a smooth(er) economic cycle is easier said than done! Fiscal policy is one tool the UK government can use to combat the cyclical nature of real GDP and help smooth the economic cycle (i.e. achieve it’s economic objectives) Fiscal policy includes both government taxation (both direct and indirect) and government expenditure Fiscal policy can therefore have a huge impact on people’s incomes and therefore their incentive to spend

SECTION 1 MANAGING THE ECONOMY Fiscal Policy in The Budget Each year the incumbent government reviews its fiscal policy, setting out the level level of taxation and spending in The Budget for the year(s) ahead Open the document called The Budget & Fiscal Policy and summarise the changes to government taxation and spending in the latest budget

SECTION 1 MANAGING THE ECONOMY Gimme 5 things you know about the Bank of England! You have 5 minutes to use the internet (if you need it!)

SECTION 1 MANAGING THE ECONOMY Monetary Policy In small groups produce a mini-slideshow which covers the following; 1.Who are the BOE? 2.What are the objectives of the BOE? 3.What is Monetary Policy? 4.How can Monetary Policy help to control inflation and economic growth? 5.How have interest rates changed over the past 10 years (chart)?