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Outline two measures the Irish Government could take to increase consumer spending in the economy - Leaving Cert Economics - Question 2 - 2010
Question 2
Outline two measures the Irish Government could take to increase consumer spending in the economy. Answer 1: Answer 2:
Worked Solution & Example Answer:Outline two measures the Irish Government could take to increase consumer spending in the economy - Leaving Cert Economics - Question 2 - 2010
Step 1
Decrease indirect taxes e.g. VAT
Answer
The Irish Government could decrease indirect taxes, such as VAT (Value Added Tax), which would reduce the overall prices of goods and services in the economy. By lowering these taxes, consumers have more disposable income available to spend on various products, thereby encouraging increased consumer spending and stimulating economic activity.
Step 2
Provide incentives to consumers to spend
Answer
Another effective measure would be to introduce incentives for consumers to spend. For instance, the government could implement a car scrappage scheme that encourages consumers to trade in older vehicles for new ones, which would promote both spending and the purchase of eco-friendly cars. Additionally, extending grants for home insulation improvements would incentivize homeowners to invest in their properties, leading to increased consumer spending in the home improvement sector.