chapter fourteen

Question 1

monetarism

Answer 1

an economic theory promoted by milton frieman/ the chicago school of economics

argued best way for government to control inflation was by restraint of government spending and borrowing and, above all, strict curbs on the money supply

Question 2

what did thatchers first budget in 1979 aim for

Answer 2

a reduction in government spending due to monetarist beleifs

Question 3

effect of the 1979 budget

Answer 3

a recession 1980
stagflation
wouldve likely led to a run on the pound (if north sea oil hadnt been discovered)

Question 4

inflation and unemployment 1980

Answer 4

inflation - 15%
unemployment - above 2 million

Question 5

what saved britain from economic crisis

Answer 5

the flow of north sea oil and gas

Question 6

1981 budget under thatcher

Answer 6

despite disastrous economic effect of the first monetarist budget, thatcher applied even more monetarist policies

government borrowing decreased further
grants to local councils cut
benefits frozen
lower taxation (shift fromn direct to indirect taxation)

Question 7

top rate of income tax 1974 versus 1988

Answer 7

83% versus 40%

Question 8

thatchers privatisations 1979-83 with dates

Answer 8

british petroleum - 1979
british aerospace - 1981
cable & wireless - 1981
britoil - 1982
british ports - 1983

Question 9

inflation rate 1979 vs 1983

Answer 9

19% to 5%

Question 10

negative impacts of monetarism

Answer 10

led to higher unemployment due to bankruptcy rates increasing to higher interest rates

Question 11

unemployment by 1983

Answer 11

1,000,000

Question 12

how much money was removed from the economy from the 1981 budget

Answer 12

£4 billion

Question 13

public response to 1981 budget

Answer 13

did not like it - heavy backclash

Question 14

how did thatcher try to increase supply

Answer 14

deregulation
privatisation

Question 15

deregulation under thatcher

Answer 15

took away gov control, let free market decide what firms survive + are successful

also took away production restrictions to increase productivity

Question 16

example of deregulation under thatcher

Answer 16

1986
chancellor Nigel Lawson introduced policies that would deregulate the London stock exchange

made london an international financial hub

Question 17

privatisation

Answer 17

selling national industry to compete in the free market

Question 18

4 examples of privatised firms post-1983

Answer 18

british airways 1987
british stell 1988
british telecom 1984
british gas 1986

Question 19

£ raised by privatisation from 1988 to 1989

Answer 19

£7billion