Chapter 3 Year 11 cont

• What are the main government objectives in economics?


  Maintaining full employment, ensuring price stability, achieving economic growth, and balancing payments.
• Why is reducing inequality considered a government objective?


  It aims to create a fairer distribution of wealth and opportunities in society.
• What is a negative impact of reducing welfare benefits for full employment?


  It would adversely affect the poor segment of society.
• How might achieving full employment conflict with price stability?


  Policies to prevent rapid price increases can reduce demand, leading to unemployment.
• How does stable prices affect business output and wages?


  Stable prices may discourage businesses from increasing output due to lack of profit incentive.
• What is the relationship between economic growth and inequality?


  Economic growth can lead to larger rewards for business owners, increasing the income gap.
• How does an increase in spending on foreign items affect the balance of payments?


  It would decrease the imbalance in the balance of payments.
• What is the impact of economic growth on environmental change?


  Economic growth can lead to negative effects on the environment due to increased production and consumption.
• What is one way the government may prevent prices from rising quickly?


  By increasing income tax.
• What is the potential consequence of a fall in demand due to government policy?


  It could lead to an increase in unemployment.
• How does economic growth affect wage levels in businesses?


  Businesses may increase wages as a result of economic growth.
• What is the effect of economic growth on the rewards for business owners?


  It leads to increased rewards for business owners.
• What is one of the government objectives related to the balance of payments?

  Tracking imports and exports.
• How does the government manage environmental change as an objective?

  By implementing policies aimed at reducing negative environmental impacts.