Workshop5
Government and macro economy
THE ROLE OF THE GOVT.
1. Government as producer In all major economies, govt. own factors of
production to produce and supply certain goods and services. These goods
include merit goods like public schools and hospitals, public goods like roads,
dams etc., while state owned enterprises are also in charge of providing
important services e.g. Public transport, airports, electricity and power supplies,
etc., while also providing necessary services like low cost housing, subsidized
health, pensions, etc. As it is a producer, it also acts as an employer of public
sector employees.
2. Government as a consumer Govt. is also a major consumer of goods and
services in a country, and this consumption is known as public expenditure. It is
of the following types: Current expenditure: any day-to-day expenses of the
govt. e.g. govt. employ wages. Capital expenditure: long term investments e.g.
cars of the govt., roads. Transfer payment: welfare payments provided by the
govt. e.g. unemployment benefits.
3. Government as a regulator and tax collector Govt. set and enforce
laws and regulations that govern the way people and firms behave. Govt.
regulate markets to ensure markets do not fail, and so that socially desirable
outcomes are achieved by markets. The govt. also set and collect taxes, which
are a main source of govt. finance and expenditure, while there are other
objectives of raising taxes which we'll discuss in later.
Other Roles



The govt. as a consumer
The govt. as a regulator and legislator
The govt. as a tax collector
Macroeconomic aims of the government
Macroeconomics: is the study of the overall national economy key indicator are GDP,
inflation, employment, tax exchange rate.
Aqqreqate Demand it is the total spending/expenditure on all goods and services in
the economy. It includes spending done by all sectors of the economy, namely
households (consumption), firms (investment), government (govt. spending), and
international markets (net exports). Therefore:
Aggregate Demand = Consumption + investment + Govt. spending + Exports —
imports
OR
AD = C+I+G+(X-M)
Aggregate supply it is the total output supplied in the entire economy over a given
time.
Macroeconomic Equilibrium it is where AD and AS intersect.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Macroeconomic aims of the government
There are 5 major aims of the govt.:
a. Economic growth an increase in the total output of the economy, measured
by real gross domestic product (RGDP). Sustained economic growth is
important as it creates more business opportunities, employment, and improves
living standards. Negative growth in RGDP or recession is when total output in
an economy falls, which leads to fall in incomes, profits, employment,
enterprise, tax revenue and living standards.
b. Full employment it is when a government achieves the lowest possible
unemployment rate in an economy (where cyclical unemployment is zero).
Low unemployment is important as it increases output, incomes, lowers poverty
and govt. spending on welfare, and raises enterprise and living standards.
c. Low and stable inflation/price stability sustained increase in price level is called
inflation. Price stability and low inflation is important as people's purchasing
power is protected, firm's costs are controlled, exports are demanded and
living standards are improved.
d. Balance of payments stability BOP records all the international transactions that
a country undertakes with other countries. It basically records all inflows and
outflows of money to and from a country. In simple terms, it is the difference
between a country's exports and imports. A stable and favorable BOP is when
either exports are more than imports, or the gap between inflows and outflows
of money is low and sustainable. A favorable BOP is important for a country
because a country may run out of foreign currency if there is an unfavorable
BOP, or it may experience high imported inflation or it may undertake massive
debt burdens, or it may potentially adversely affect local firms.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
e. Redistribution of income: this refers to reducing the gap between the rich and
the poor in an economy. Lowering income inequality is important as it is
equitable to reduce income gaps in an economy, and because it is important
to improve the living standards of the poor as well. Progressive taxes are
normally used coupled with transfer payments.
Tools or Policies used to achieve these aims are known as fiscal, monetary (both
known as demand side policies) and supply side policies.
Conflicts between macroeconomic aims
Conflict in aims refers to when there is a trade-off in the govt.'s macro aims, that is,
when they pursue a policy to achieve one aim, that coincides with them forgoing
another.
1. Low unemployment OR low inflation Low unemployment and price
stability can often conflict with each other. If there are policies that lower
unemployment (demand side policies) this leads to higher incomes, which
leads to an increase in aggregate demand, and as aggregate demand rises,
that leads to high inflation. Moreover, if the govt. wants to reduce inflation, they
might implement policies that may increase taxes, which may lower
employment opportunities as firms might not want to hire workers. We will
discuss this conflict in particular with each policy.
2. High growth and employment OR Favorable BOP High growth and
employment means higher incomes. As there are high incomes, people tend
to demand higher imports, which creates an unfavorable and unstable BOP for
an economy.
3. High Economic growth OR better environment High growth means high
output being produced, and greater the production levels in an economy, the
greater will be the pollution levels in the economy, which negatively affect the
environment
Do conflicts always exist?
Not necessarily. We will see that supply side policies eliminate the conflicts between
inflation, growth and employment, the three most important economic aims of the
govt. Low inflation will encourage people to buy more, which increases growth and
creates more employment, while low inflation also encourages locals to buy domestic
goods and reduce imports, thus maintaining stable Bops.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Fiscal Policy & Taxes
Government's Budget
It is a forecast of the govt.'s expected spending and revenue the govt. may earn over
a 12month period (financial year).
Balanced budget Govt. spending = Govt. revenue.
Budget surplus Govt. spending < Govt. revenue.
Normally the govt. plans for a surplus when its economy is growing fast and there is
high inflation.
Budget deficit Govt. spending > Govt. revenue.
Normally the govt. plans for a deficit when the economy is either in a recession or
the growth rate is very low.
Government spending: Objectives



To provide public and merit goods
To invest in national infrastructure e.g. roads
To support agriculture and other industries through subsides

To manage the macroeconomy through fiscal policy e.g. inflation, GDP

To lower income inequality through welfare e.g. unemployment benefits,
poverty support payments.
Sources of qovt. Finance/public sector borrowing
a. Borrowing from private sector e.g. commercial banks and general
public or public sector borrowing i.e. central banks. National debt is the
amount of money borrowed by the public sector
b. Sale of nationalized assets and industries
c. Revenue from govt. owned firms
d. Revenue from direct and indirect taxes
Public sector borrowings V/s National debt.
 The amount of money a govt. needs each year to finance any shortfall of
public revenues below total public expenditure is called the public sector
borrowings.
 The total amount of money borrowed by the public sector of a country over
time that has yet to be repaid is called the public sector debt or national
debt.
Reasons for govt. spending




To provide goods and services that are socially and economically desirable
To invest in social and economic infrastructure
To support agriculture and other key industries
To reduce income inequalities.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Taxation: Objectives – tax is the amount of charge or levy imposed by govt.





Taxes are used to generate revenue for public expenditure
Taxes are used to manage macroeconomy through fiscal policy
To reduce inequality by taxing the rich and spending on the poor (progressive
tax)
Discourage people/firms to use/produce harmful goods (excise duties)
Discourage people from buying imported goods (tariffs)
Characteristics of good Tax system
There are six characteristics which a tax system should have.
-
-
Equity they should be fair i.e. higher on rich and lower in poor
Non-distortionary: should not affect workers' willingness to work or producers'
willingness to produce
Certainty workers and firms should know when and how much tax they have
to pay.
Convenience: firms and workers should not find it difficult to give taxes to the
govt. and the govt. should provide ease of tax payments
Simplicity tax should be easy to understand and tax rates should not be too
complex to calculate, moreover govt. should be able to collect tax easily and
efficiently
Economic The tax revenue govt. collect should always be greater than the
expenditure to collect tax
Tax Systems
a. Progressive tax it is a tax
system which charges a
higher income tax rate on the
rich. Higher the income,
greater the tax rate
b. Proportional tax it is a tax
system which charges the
same tax rate on all income
groups. So the tax rate
remains the same
c. Regressive tax it is a tax system
which charges a higher
income tax rate people higher the income, lower the rate,
How to calculate tax rates (ART)?
Average rate of tax (tax rate)
=
Total tax paid
Total income earned
Muhammad Taha Khan – The city school
x100
Workshop5
Government and macro economy
Types of taxes
 Direct taxes are charged directly on the incomes of consumers and profit of
producers. It is mostly progressive in nature, as seen in the example above. They
shift the demand curve left.
Types of direct taxes include:
a. Capital gain tax it is a tax levied on the gains made from the sale of some asset
b. Wealth tax it is a tax on the personal wealth/assets/savings of a person
Advantages
Disadvantages
High revenue is generated: in case of
progressive tax system
Reduce work incentive as people may not
work for fear of paying high taxes
Reduce income inequality: taken from
rich and given to the poor
Tax evasion: people can hide their actual
income and hence pay lower taxes than
what they should
Based on ability to pay: progressive
tax
Negatively affects aggregate
which may reduce employment
demand
c. Income tax it is a tax levied on an individual's income over a year, Cooperative
tax: it is a tax levied on the profits of corporations
 Indirect tax- these are taxes that are added to the price of goods and services
are therefore collected from transactions made by or spending done by
people. They are always regressive in nature, as most of the burden of such
taxes falls on the poor. They shift the supply curve left, as they increase the
producers' cost of production.
Advantages
Disadvantages
 They can be used to target
specific products and activities
 They expand the tax base
 They are cost effective
 They are flexible
Muhammad Taha Khan – The city school
 Their impact is inflationary
 Indirect taxes are regressive and
can
increase
income
inequalities
 Revenues from indirect taxes
uncertain
 It encourages tax evasion and
smuggling
Workshop5
Government and macro economy
Fiscal policy
t is a policy through which the government tries to achieve its macroeconomic
aggregate demand through the tools of taxes and government spending.
I
It involves varying the overall level of public expenditure and/or taxation in an
economy to manage aggregate demand.
Expansionary (Increase in AD)
Increase in Govt.
decrease in Taxes
expenditure
Contractionary (decrease in AD)
or Decrease in Govt. expenditure or
increase in Taxes
Rightward shift in AD
Leftward shift in AD
Problems with fiscal policy
a. Fiscal policy is difficult to use optimally e.g. it can result in over-heating if
aggregate demand is greater than aggregate supply leading to inflation and
shortage. Sometimes fiscal policy cannot be correctly measured and
approximated. This is why sometimes a Govt. can increase its expenditure to
come out of recession much more than what is required which leads to overheating. This leads to conflict in aims of growth and inflation.
b. Fiscal policy can lead crowding out effect. To increase govt. spending, govt.
needs to increase borrowing from private sector— fall in investment in private
sector as funds to invest falls as govt. borrows more, this leads to increase in
loan repayments and interest payment of the govt.
c. Expansionary fiscal policy can develop inflationary expectations. As a rise in
govt. spending hence they will demand mean people higher wages expect to
AD counter to rise, that, they which will also leads expect to increase in firms’
costs and that may cause cost push inflation.
Monetary Policy
It is a policy through which the govt. tries to achieve its macroeconomic
aggregate demand through the tools of money supply (open market operations),
interest rates and in turn, exchange rates.
It involves the changes in the money supply and/or interest rates in an economy
to influence the level of total demand and economic activity.
Expansionary (Increase in AD)
Contractionary (decrease in AD)
a. Increase in money supply or
decrease in interest rates
b. Increase in AD as borrowing
increase, exports and decrease
in savings
c. Rightward shift in AD
d. Increase in inflation, decrease in
BoP as imports
a. decrease in money supply or
increase in interest rates
b. decrease in AD as borrowing
decrease, in exports and
increase in savings
c. leftward shift in AD
d. decrease in inflation, increase in
BoP as imports
e. low
unemployment
and
economic growth
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
e. High
unemployment
and
economic growth is conflicted
by high inflation and low BoP
Supply side policy
These are policies that aim to increase aggregate supply of the economy by
making markets and industries operate in a more efficient manner in order to
expand the productive potential of an economy and increase its output. The
biggest advantage of supply side policies is that Over the long run, they eliminate
all conflicts in policy aims between inflation, employment, economic growth and
BOP, and achieve all the aims simultaneously.
Tools or instrument of supply side policies
a.
b.
c.
d.
e.
f.
g.
Tax incentive to a firm
Subsidies
Improving education and training of labor force
Labor market reforms
Competitive policies
Privatization
Regulations and deregulations
Problems with supply side policies
a.
b.
Expensive to implement
lagged effects
Economic growth
The circular flow of income in macroeconomics
dictate that (National output = national income =
national expenditure).
Where national output of an economy is the total
value of output of goods and services produced in the
economy, national income is the total amount of
income earned by the factors of production, and
national expenditure is what people and organizations
spend on goods and services.
 National output—the total value of all goods
and services produced by the factors of production of the residents of a
country.
 National income—the total amount of income earned by all the factors of
production of a country
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
 National expenditure—the value of the total or national output of an
economy can be measured by how much people and organizations pay
for all the goods and services it comprises.
Gross Domestic Product
GDP: market value of the final output produced within an economy over a period of
time. There are 3 methods of calculating GDP:
a. Output Method: this involves adding up the value of output produced in each
period by
otherwise every firm double in every counting industry of in a
value economy. of some However, only the final outputs are counted.
b. Income method: all income earned by the factors of production while
producing output Transfer payments are not included in GDP (welfare
payments)
c. Expenditure method: spending by consumer + spending by organization +
spending by government + (exports — imports)
Causes of Economic growth—it involves increasing the total output produced by
resources in an economy. If the total supply of goods and services can increase over
time in line with rising demand, then they can be enjoyed without an increase in their
prices. Following are the causes of an economic growth:





The discovery of natural resources
Investment in new capital and infrastructure
Technical progress
Increasing the quantity and quality of human resources
Relocating resources
Consequences of recession—Economies can sometime experience periods of
negative economic growth or falling real GDP during
a. An economic recession – involving a relatively short period of negative growth
that may last up to year
b. An economic depression or slump – which may last several years.
During period of negative economic growth an economy will be producing below
its PPC.
Business Cycles
Ups and downs in the economy are called business cycles. They are explained under:
i)
ii)
iii)
iv)
Boom: a time period, where businesses are earning huge profits and
employment is very high
Depression: a time period in which profits start falling, output falls and
employment declines
Slump or recession: a time period in which businesses are facing huge losses,
production is at its lowest and unemployment is at its peak
Recovery: a time period where businesses and economy start recovering
from slump, output starts rising and unemployment rate falls.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Benefits of Economic growth
a.
b.
c.
d.
e.
f.
Greater availability of goods and services
Increased in employment opportunities
Increased sales and profits
Low and stable price inflation if growth in output matches increase in demand
Increasing tax revenue for govt.
Improved living standards and economic welfare
Negatives of economic growth
a. May lead to massive income inequality as benefits of growth concentrated
with the elite
b. Technical progress may replace workers with machines leading to
unemployment
c. May use scarce resources at a fast rate which adversely affects future
generations
d. May increase air, noise and water pollution due to more energy used and
output produced
The best type of growth is known as sustainable growth which involves reducing the
rate at which we use up natural resources, reducing waste in production and
consumption and reducing harmful emissions by changing the way we produce and
consume goods, and saving resources for future generations.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Policies to promote economic growth
Demand side policies (short run):
Expansionary fiscal policy through increased govt. spending and reducing taxes
increase AD which leads to increase in output and employment.
Expansionary monetary policy through increased money supply, reduced interest
rates and exchange rates increase AD which leads to increase in output and
employment
Supply side policies (long run):
a. Investing in education and training increases labor productivity
b. Investing in economic infrastructure e.g. roads and dams improves economic
capacity
c. Giving tax cuts and subsidies lowers costs and increases willingness to enterprise
d. Encouraging multinationals to establish plants in domestic country
Employment and unemployment
i)
ii)
iii)
iv)
v)
Labor force: it is the working population or economically active population of
an economy. It consists of all people who are willing and able to work. Hence:
Labor force = employed + unemployed
Labor force participation rate: it measures the percentage of the working-age
population that is either in work or are looking for work.
Employment by industrial sector: this measures the number/proportion people
working in agricultural and manufacturing sector, compared to service
developed countries, employment in services sector is high due to higher skills
and higher
Employment status: this shows the number of people employed full time, part
time, or in temporary work. Most workers, especially males, are in full time
employment, while part time employment has shown an increasing trend due
to greater involvement of females in labor force, while services sector e.g.
education is o leaning more towards part time workers.
Unemployment: it measures the number of people who are willing and able to
work but cannot find a job in an economy. Level of unemployment refers to
the number of people who are unemployed, while rate of unemployment
refers to the proportion of labor force that is unemployed.
Unemployment rate = Total unemployed x 100
Total labor force
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Causes of unemployment
a. Frictional unemployment: this occurs when a person is in between different
jobs, or when a person has just completed education and is looking for jobs.
b. Seasonal unemployment: this occurs due to change in demand for workers
during different times/seasons of the year, e.g. guides in the northern areas are
employed during the summers and unemployed during the winters.
c. Cyclical unemployment: also known as demand-deficient unemployment, it
occurs when there is too little demand for goods and services in the economy
during an economic recession. When there is a fall in demand, stock of unsold
goods rises which lowers profits, firms lower their demand for labor and off-load
its current workers as well which increases unemployment and lowers incomes
which further lowers demand and hence creates greater unemployment, and
so on. This process is known as the multiplier effect.
d. Structural unemployment: arises when there is a long-run change in the
structure of the economy as the entire industry in an economy closes down
because of a lack of demand for such goods. Thus, such workers' skills become
redundant and they have to learn new skills to find jobs again, e.g. producers
of typewriters have had to learn different software programming and new
computer production techniques to find jobs again as typewriters became
obsolete.
e. Technological unemployment: this occurs when new and inventive and
effective technology like robots and machines start replacing workers in the
production of goods and services.
Imperfections in labor market
Imperfections in labor market, where demand for labor doesn't equal supply of labor
to unemployment in a country. Reasons for such imperfections are:
a. Powerful trade unions may force up wages which lowers labor demand
b. Unemployment benefits may reduce incentive to work, lowering labor supply
c. Other employment costs can reduce demand for labor, e.g. Medical
insurance for labor
d. Lack of information can prevent people from finding jobs
e. Minimum wage legislation may reduce labor demand
prevents workers from
Labor immobility
Costs of unemployment
a.
b.
c.
d.
e.
f.
g.
Loss in incomes and increase in poverty
Fall in health resulting from mental stress and depression
De-skilling: loss of skill due to long term unemployment
Increase in crime rates and social unrest
Govt. opportunity cost rises as it has to pay unemployment benefits
Fall in govt. revenue
Fall in GDP and exports
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Policies to reduce unemployment
Demand side policies (short run)
-
Expansionary fiscal policy through increased govt. spending and reducing
taxes increase AD which leads to increase in output and employment.
Expansionary money policy through increased money supply, reduce interest
rates and
exchange rates increase AD which leads to increase in output and
employment
Supply side policies
a. Investing in education and training increase labor productivity.
b. Investing in economic infrastructure e.g. roads and dams improve economic
activity.
c. Giving tax cuts and subsidies lower costs and increases willingness to employ.
d. Encouraging multinationals to establish plants in domestic country
e. Labor market reforms by restricting the power of the employer and trade union.
f. Reducing unemployment benefits to increase willingness to work.
Inflation and deflation
Inflation is the persistent rise in the general price level over time in a given economy.
Different degrees of inflation are:
Hyperinflation: the rate at which the prices increases phenomenally.
Disinflation: When inflation is falling, but prices are rising at a decreasing rate, e.g.
inflation in Pakistan in 2013 was 17%, but it came down to 10% in 2014.
Deflation: when price level is falling, or when inflation is negative, e.g. -5% inflation in
2015.
Measurement of inflation through CPI
Rate of inflation: in an economy is calculated by calculating the average percentage
change in the Price level of an economy, calculated through the Price Index (CPI) or
Retail Price Index (RPI). CPI/RPI is the average price goods and services in the
economy, and is known as the cost of living indirect taxes on all goods and services.
Uses of CPI
a. As an economic indicator: As it is widely used to measure inflation, CPI is used
as an indicator of cost of living and hence purchasing power of people in an
economy. It is also used to calculate the real value of many economic series
like incomes or GDP etc.
b. Indexation: Indexation involves tying certain payments to the rate of -increase
in price inflation to keep their real value constant. E.g. a worker demands that
the employer indexes his wage to the rate of inflation. So, if the inflation rate is
10%, his annual wage increase will be 10%, while if it is 15%, his wage increase
will be 15% as well.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
Problems with calculating CPI
a. allocating weights can be a very difficult job
b. collection of information on prices very difficult
c. quality of goods cannot be identified through indexing
d. selection of base year complex
e. very difficult to compare different index between different countries
Types of inflation
a. Demand pull inflation it occurs when the
aggregate demand of an economy rises
which pushes prices up as supply cannot meet
the rise in demand.
One of the biggest causes of demand pull
inflation is monetary inflation. A rise in money
supply raises aggregate demand as people
have more money in their pockets to spend
but the output hasn’t increases as much. This
leads to increase in prices to equate
aggregate demand and aggregate supply
again.
Monetarist economists argue that a simple way to control monetary inflation is
through the monetary rule, which states that increase in money supply should
only equal increase in real GDP, which will keep inflation constant.
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
b. Cost-push inflation it is caused by
a rise in the cost of production
which lowers aggregate supply
and hence increases prices and
lowering output. One of the
biggest causes of cost-push
inflation is known as wage-price
spiral, which occurs When an
increase in price leads to workers
demanding higher wages, which
increases costs, which pushes
prices up further, and so on
c.
Imported inflation when price
level rises due to a rise in prices of
goods imported from abroad. This may be due to inflation in trading partners or
depreciation of local currency.
Inflation is Good for
-
-
-
Inflation is bad for
firms when the economy is
consumers with fixed income
when experiencing creeping
demand-pull inflation as profits
rise while purchasing power
remains strong.
Unemployed as they will get
more jobs opportunities as
businesses expand in case of
demand pull inflation
Govt. as incomes and profits rise
so does it tax revenues
Borrowers as real interest rate
falls
-
Consumers with fixed income
Firms especially in case of high
cost push inflation
Tax revenue will fall.
Exports becomes expensive so
potential decline in exports.
Policies to control inflation
a. Government announcing a long-term inflation target: if people believe that
govt. Will keep inflation low in the future, they are less likely to demand higher
wages, which reduce the chances of cost-push inflation
b. Demand-side policies: to reduce demand-pull inflation, the govt. should:
tighten/contract fiscal policy by reducing govt. spending or raising direct taxes
to reduce spending tighten/contract monetary policy by reducing money
supply or raising interest rates to reduce spending
c. Supply-side policies: expanding productive capacity of an economy can
reduce inflationary pressures due to rising demand and production costs
Muhammad Taha Khan – The city school
Workshop5
Government and macro economy
through policies like improved training of workers, cutting corporation taxes,
providing subsidies to firms, etc.
d. Direct controls: govt. may directly control prices and wages through: limiting
wage increases of public sector workers to reduce purchasing power and thus
AD capping the prices firms can charge from their customers through
regulations e.g. maximum price laws limiting the rate at which public sector
enterprises can raise their prices
Policy choices and their effectiveness
a. Demand-side policies: contracting AD is ineffective if inflation is caused by
global factors e.g. rising food and oil prices, or by cost-push factors.
Contractionary policies can also hurt low income people and create
unemployment (conflict in aims).
b. Supply-side policies: they are only effective in the long run
c. Direct controls: limits on public sector wages will reduce incentive to work for
the govt. Cutting prices of private sector goods will reduce their profits and
reduce incentive to enterprise.
EXAM PRACTICE QUESTIONS
Q1. Distinguish with the use of examples between progressive and regressive taxes.
(M-3)
Q2. Discuss the extent to which a direct tax, such as income tax, can affect the
distribution of income in an economy. (M-10)
Q3. Distinguish between direct and indirect taxes (M-4)
Q4. Discuss how govt. might finance its expenditure. (M-6)
Q5. What is meant by a govt. budget. (M-4)
Q6. Discuss the possible causes of inflation. (M-10)
Q7. Explain how a govt. might calculate the rate of inflation in its economy (M-6)
Q8. Explain two reasons why govt. aim for low and stable inflation (M-4)
Q9. Explain why the pattern of employment might change. (M-8)
Q10. Explain how different types of unemployment may be caused and consider
which might be the most serious. (M-10)
Q11. Describe how economic growth is measured. (M-4)
Q12. State four economic aims a govt. may have other than economic growth. (M-4)
Q13. What might a govt. do to try to redistribute income> (M-6)
Q14. Discuss to what extent supply-side policies are likely to be more effective than
monetary policies in stimulating economic growth (M-10)
Muhammad Taha Khan – The city school