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  •  Fiscal policy

Click to read the article below and then answer the questions:

Sunak defies hawkish instincts to oversee massive expansion of state

  • Identify the components of fiscal policy.

  • Distinguish between a budget deficit and a budget surplus.

  • The article refers to ‘the yearly real-terms increase of 3.3 per cent in day-to-day spending on public services.’ Explain what is meant by a real-terms increase.

  • With reference to chart 1, compare government spending and tax revenues during the period shown.

  • Health and care costs will be among the main drivers of pressure on the public finances. Paul Johnson, director of the IFS, states that measures to boost capital investment and address demographic pressures on health and social care were ‘largely . . . unrelated to the crisis’. Evaluate whether the UK’s relatively low tax burden will inevitably continue to rise.

Gavin Clarke, Emmanuel College

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