Economics – Microeconomic decision-makers - Households | e-Consult
Microeconomic decision-makers - Households (1 questions)
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(a) Three policies the government uses to influence consumer confidence are:
- Fiscal Policy (Government Spending): Increased government spending on infrastructure projects (e.g., roads, schools) can create jobs and boost economic activity, leading to higher incomes and increased confidence.
- Monetary Policy (Interest Rates): Lowering interest rates makes borrowing cheaper for households and businesses, encouraging spending and investment.
- Tax Cuts: Reducing income tax or other taxes increases disposable income, giving households more money to spend and boosting their confidence.
(b)
- Fiscal Policy: Government spending on infrastructure creates jobs, reducing unemployment and increasing incomes. This leads to a more positive outlook on the economy and boosts confidence.
- Monetary Policy: Lower interest rates reduce the cost of borrowing, making it more affordable for households to take out loans (e.g., mortgages, car loans). This encourages spending and investment, improving the economic outlook and confidence.
- Tax Cuts: Tax cuts directly increase disposable income for households. More money in their pockets leads to increased spending and a more optimistic view of their financial future, boosting confidence.