Recognise the significance and limitation of policies in affecting the economy.
Amidst the slow growth in the European Union (EU), there is persistently high budget deficit and ballooning public debt which have become major concerns for many governments in the EU. As a result, they have implemented ‘austerity measures’ to reduce their budget deficit by raising taxes and cutting back on public spending, so as to reduce their debts.
Explain what would limit the effectiveness of the austerity measures in the EU. 
What you need to know to attempt this essay question?
First, explain austerity and the purpose behind this policy, which is due to the rising expenditures incurred in the EU states that led to rising debts. Second, explain the impact of austerity on the economy, hence linking it to the four macroeconomic aims. Lastly, explain how the effectiveness stems from the extent of impact of the policy.
- Aims of Government
- Macroeconomic Policies
How to apply the knowledge to your exam preparation?
From the video, prepare an essay outline on how to tackle the question. Thereafter, aim to complete the essay within 45 mins, so as to improve your writing and thinking skills.
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