What you'll learn
How governments manage the economy.
Key ideas
- Fiscal policy (tax and spending) vs monetary policy (interest rates).
- Direct (income) vs indirect (VAT) taxes.
- Budget deficits and supply-side policies; the Bank of England sets the base rate.
Exam tips
- Distinguish fiscal from monetary policy.
- Explain how interest rates affect spending.
Common mistakes
- Confusing fiscal and monetary policy.
- Mixing up direct and indirect taxes.