Business

• How do governments manage inflation?

  By using monetary policy to adjust interest rates and control the money supply.
• What action did the UK government take in 2022 to combat rising inflation?

  The Bank of England raised interest rates.
• What is monetary policy?


  Actions taken by a central bank to manage the money supply and interest rates.
• What is economic growth?

  An increase in the production of goods and services
• What is economic growth measured by?

  GDP (Gross Domestic Product)
• How do governments boost economic growth

  By using fiscal policies like public investment in infrastructure.
• What is fiscal policy?

  The use of government spending and tax policies to influence the economy.
• What is the unemployment rate?


  The percentage of the labor force that is jobless and actively looking for work.
• What was an example of a government program to reduce unemployment?

  Germany’s subsidized employment programs during the 2008 financial crisis.
• What is a trade deficit?


  When a country imports more than it exports.
• What are tariffs?

  Taxes on imported goods.
• Give an example of a trade agreement

  The European Union’s free trade agreements with multiple countries to promote exports.
• What do trade agreements do?

  They reduce barriers to trade between countries.
• How do governments promote exports and imports?

  Through trade agreements, tariffs, and subsidies.
• What is the purpose of unemployment benefits?

  To provide a safety net for individuals out of work.
• How do governments aim to reduce unemployment?

  Through job creation programs, vocational training, and subsidies for businesses that hire more workers.
• What is quantitative easing?

  A monetary policy where central banks buy government bonds to increase the money supply.
• What is an interest rate?


  The percentage charged by lenders for borrowing money or paid to savers.
• How do governments control inflation?

  By raising interest rates, reducing spending, and adjusting the money supply.
• What do fiscal policies involve?

  Adjusting taxes and government spending to stimulate or slow down the economy.
• How do central banks stabilize currency?

  Through interest rates and money supply.
• How do governments stimulate long-term economic growth?

  By investing in infrastructure, education, and technology.
• What are supply-side policies?

  Measures to increase productivity and innovation
• What is GDP (Gross Domestic Product)?

  The total value of goods and services produced in a country
• What policies do governments use to encourage hiring and reduce unemployment?

  Policies such as tax incentives for businesses.
• How can trade agreements and tariffs affect exports?

  They can encourage exports or protect domestic industries from foreign competition
• What are subsidies?


  Government financial aid to businesses to make their goods or services more competitive.
• What is job creation?

  Government efforts to increase employment through investment in industries.
• What is a monopoly?


  A market structure where one company dominates the market
• Why do governments intervene in markets?

  To correct issues like monopolies or externalities
• Why does market failure occur?

  It occurs when markets fail to allocate resources efficiently.
• What are externalities?


  Side effects of economic activities that affect third parties, such as pollution.
• How do governments manage essential services?

  Through public sector organizations like healthcare, education, and infrastructure.
• What ensures that public services meet public needs efficiently?

  Public accountability
• What is the public sector?

  The part of the economy controlled by the government, including services like police, schools, and hospitals.
• What is a budget deficit?

  When a government’s spending exceeds its revenues.
• Why is effective financial management important for governments?

  To deliver services sustainably.
• How do governments fund public sector activities?

  Through taxes (mostly income tax and NI contributions), borrowing, and grants.