Government policy: aims, taxes, the Budget & interest rates
The government does not only produce and employ — it steers the whole economy, the way a driver steers a car. In this lesson we learn what a government economic policy is, and the five great aims it works towards: full employment, stable prices, economic growth, fairer incomes and a balanced balance of payments. We meet its two main sets of tools — fiscal policy (spending and taxes, through the Budget) and monetary policy (interest rates, through the Bank of Namibia). We sort taxes into direct and indirect, and progressive, regressive and proportional, with a worked progressive-tax and VAT sum. Finally we see how raising or lowering the interest rate speeds up or slows down business activity.
By the end you should be able to (NSSCO Economics 6.2):
- Define government economic policy
- Discuss the aims of government policy and why they should be achieved (full employment, prevention of inflation, economic growth, redistribution of income, balance of payments stability)
- Explain the fiscal and monetary policies of the government
- Describe the different types of taxes
- Discuss how taxes are used by the government to influence business activities and the role of the budget
- Describe how the government can use the interest rate to influence business activity
Miss Hilma and Mike talk through the whole topic — with the figure and working drawn live.