Xzerzes
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Hi guys I'm in need of a little starting off help I've been set a 25 mark essay and need some help to organise ideas really. The essay is titled 'comment upon the effectiveness of using fiscal policy to meet the government's macroeconomic objectives'
So far I've explained the key points in the title but I'm struggling to think of any real structure for the rest of the essay. Does anyone have any suggestions? I was thinking maybe explaining the time lag of fiscal policy making it hard to assess the effectiveness in my first paragraph but I'm not sure
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tinkerbella~
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(Original post by Xzerzes)
Hi guys I'm in need of a little starting off help I've been set a 25 mark essay and need some help to organise ideas really. The essay is titled 'comment upon the effectiveness of using fiscal policy to meet the government's macroeconomic objectives'
So far I've explained the key points in the title but I'm struggling to think of any real structure for the rest of the essay. Does anyone have any suggestions? I was thinking maybe explaining the time lag of fiscal policy making it hard to assess the effectiveness in my first paragraph but I'm not sure
Start by defining fiscal policy and analysing how it works, eg. expansionary fiscal policy increases AD by reducing taxation and/or increasing government spending.

Show an outward shift in AD, explain how this might affect growth, unemployment, inflation, current account etc.
Possibly show an outward shift in LRAS, arising from possible government spending on training/education or reduced corporation tax.

Advantages of FP:
- Govt spending can be directed towards specific areas of need
- Can be used to increase consumption of merit goods & decrease consumption of demerit goods
- Redistribution of income through progressive taxes
- etc.

Disadvantages:
- Time lag
- Govt spending can be inflexible, hard to suddenly withdraw funds from half completed schools/hospitals/whatever
- Possibility of unexpected reactions
- Expansionary FP will increase budget deficit
- etc.

Overall, the effectiveness of FP depends upon:
- Initial level of economic activity, ie. output gap
- Level of change in tax/spending
- Multiplier
- Whether it's offset by any other factors

Then conclude.

That's obviously quite a general structure but it's the sort of things you should be looking to include. There'll be more advantages and disadvantages that I can't be bothered to list here, include them too if you want/if you have time.
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Xzerzes
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Thank you very very very much your reply was the best I could have hoped for! I should have this totally sorted now
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tinkerbella~
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(Original post by Xzerzes)
Thank you very very very much your reply was the best I could have hoped for! I should have this totally sorted now
No problem, glad it helped let me know if you need anything else
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