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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. [10]

Question Requirements

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

Knowledge Application

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.

Simon Ng

Founder, JC Economics & General Paper Tutor at Economics Focus
JC Economics Tutor Simon Ng of Economics Focus has been teaching A Level Economics and A Level General Paper since 2003. Simon set up Economics Focus to assist students in their pursuit of academic excellence at the examination by providing economics tuition for H1 and H2 students. JC1 and JC2 students are inspired by Simon's clear teaching methods that enabled them to comprehend economics terms and concepts. Simon developed the Rational Thinking methodology to aid students to excel in their JC economics essays and CSQs.