Starter quiz
- Which member of the Cabinet is responsible for overseeing the work of HM Treasury?
- Speaker of the House
- Chief Whip
- Chancellor of the Exchequer ✓
- Prime Minister
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- What is the role of taxes?
- to take money away from businesses and individuals with no benefit
- to fund public services and government spending ✓
- to encourage people to spend less money
- to ensure that businesses always make a profit
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- Fill in the blank: The main tax taken form a person's pay is known as ______ tax.
- 'income' ✓
- Match the terms to the correct definitions.
- budgeting⇔planning income and expenses to manage money effectively ✓
- borrowing⇔taking money from a lender with an agreement to repay it later ✓
- saving⇔setting aside money for future use, often in a bank account ✓
- consumer rights⇔protections and entitlements when buying goods or services ✓
- interest⇔the extra money a person needs to pay back for having loan ✓
- What is 'the Budget'?
- a monthly report on the UK’s economic performance
- a list of all government debts and loans
- a global agreement on economic policies between countries
- a yearly statement where the Government outlines its spending and taxation plans ✓
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- What does 'VAT' stand for?
- Value Added Tax ✓
- Variable Annual Tax
- Voluntary Additional Tax
- Voter Allocation Tax
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Exit quiz
- Match the term to its correct definition.
- economy⇔the system of trade, industry and money in a country ✓
- inflation⇔the rate at which prices rise, affecting the value of money ✓
- gross domestic product (GDP)⇔the total value of all goods and services produced in a country ✓
- recession⇔a period where a country's overall financial activity decreases ✓
- Fill in the blank: The UK Government may raise ______ during strong economic times to prevent inflation from rising too fast.
- 'taxes' ✓
- Which of the following is not a way the Government responds during a recession?
- lowering taxes
- borrowing money
- raising interest rates ✓
- limiting pay increases for public servants
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- Why might some people feel that the Government should avoid implementing austerity measures?
- It can lead to cuts in public services, affecting vulnerable people. ✓
- It increases government debt in the long run.
- It prevents inflation from rising.
- It has no impact on employment levels.
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- Which of these is a feature of a healthy economy?
- high levels of government borrowing
- low unemployment ✓
- sharp increases in the cost of living
- decreasing business investment
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- How did the economy influence government action during the height of the Covid-19 pandemic?
- All countries were equally able to buy supplies, regardless of economic status.
- Governments reduced healthcare spending to focus on other priorities.
- Governments avoided spending money during the pandemic to prevent debt.
- Richer countries could afford more medical equipment, protection and vaccines. ✓
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Worksheet
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Lesson Details
Key learning points
- A healthy economy has GDP growth, low unemployment, stable inflation and strong business investment.
- In a recession, the Government may borrow money or lower taxes, while in a strong economy, it invests in services.
- Inflation is important, and the Government aims to keep it low but positive to prevent rapid price rises or slow growth.
- Taxes may be raised to control inflation in good times, and cut to boost spending in a recession.
- While areas like defence, law enforcement and elections are less affected by the economy, it still influences decisions.
Common misconception
Inflation is always a negative thing because it raises prices of goods and services.
A small amount of inflation is actually necessary to keep the economy stable and encourage spending.
Keywords
Economy - the state of a country or region in terms of the production and consumption of goods and services and the supply of money
Inflation - the rate at which the prices of goods and services rise over time, meaning money gradually loses value
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