OCR F585 - Revision Questions for Extract 2

Here is a selection of revision questions linked to extract 2 of the OCR F585 stimulus materials

a. Explain two possible relationships between the macro objectives shown in Fig 2.1
b. Explain the difference between a cyclical and discretionary budget deficit
c. Explain the difference between a budget deficit and the national debt
d. Comment on the limitations of a policy of very low interest rates as a way of helping an economy experiencing a recession
e. What factors will affect the size of the multiplier effects arising from the fiscal stimulus policies introduced by the UK government
f. Analyse the possible “crowding-out” and “crowding-in” effects from higher government spending and borrowing
g. To what extent have the UK and many other EU countries made the right decision in choosing to break their fiscal rules during this recession?
h. Analyse the methods by which countries with large fiscal deficits can bring their borrowing under control
i. Evaluate the economic significance of the British government running a budget deficit of more than 10 per cent of national income in each of the three years from 2008 through to 2010.