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Government Aims in a Nutshell

IGCSE 9TH AND 10TH GRADE 'GOVERNMENT AIMS' IN A NUTSHELL

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Government Aims in a Nutshell

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  1. GOVERNMENT AIMS IN A NUTSHELL

  2. There are 5 major aims of a government 1. Economic Growth 2. Low Unemployment 3. Price Stability 4. Balance of Payment Stability 5. Distribution of Income

  3. ECONOMIC GROWTH

  4. (see lesson: Economic Growth) If G.D.P. falls, then there is…

  5. Less output of G & S Less workers needed Unemployment increases Purchasing power decreases Standards of living decrease Businesses shrink

  6. Therefore the government plans to increase economic growth and get…

  7. More output of G & S More workers needed Unemployment decreases Purchasing power increases Standards of living increase Businesses grow

  8. LOW UNEMPLOYMENT

  9. Labour Force is the total number of people willing and able to work in an economy

  10. Unemployment Rate = Unemployed Labour Labour Force

  11. A government gains revenue from the taxes that are charged on the income

  12. When people are employed and earn wages or salaries, the government gets a part of it

  13. Also, more the employment, more the economic potential growth

  14. But if unemployment is high then…

  15. Level of output is low People don’t produce goods Government gives unemployment benefits Costs government money Public services may suffer

  16. PRICE STABILITY

  17. Price Stability is the control of inflation or value of money in an economy

  18. If prices rise rapidly then …

  19. Wages don’t buy as many goods Purchasing power decreases Higher prices than other countries Goods become less economically competitive Imports increase Businesses may shrink and living standards fall

  20. Thus, the government ensures there is only a little rise in price to give producers an incentive to produce more

  21. BALANCE OF PAYMENT STABILITY

  22. Balance of Payment (BOP) is the record of a country’s economic transactions with other countries

  23. If the imports of a country exceed the exports, more money flows out of the economy and the currency’s value decreases

  24. This may lead to debt and decrease in economic power of a country

  25. If the exports of a country exceed the imports, it indicates that the…

  26. country is selling more goods than it is consuming

  27. This may bring foreign currencies down but the country itself doesn’t benefit from any high output consumption

  28. REDISTRIBUTION OF INCOME

  29. Unequal distribution of income can lead to poor staying poor and richer becoming richer

  30. That’s why the government tries to bridge the gap between the rich and poor by taxing the rich more

  31. However, too high taxing for the rich may act as a disincentive to produce

  32. FUN LESSONS IN A NUTSHELL DESIGNED AND PRODUCED BY TRISHIT DEDHIA SOURCES: CAMBRIDGE IGCSE AND O LEVEL ECONOMICS

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