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'Austerity' is a consequence of the policy of reducing Government Budget Deficits - Leaving Cert Economics - Question 4 - 2012
Question 4
'Austerity' is a consequence of the policy of reducing Government Budget Deficits. Outline any two effects which government 'austerity' measures may have on Irish ci... show full transcript
Worked Solution & Example Answer:'Austerity' is a consequence of the policy of reducing Government Budget Deficits - Leaving Cert Economics - Question 4 - 2012
Step 1
Effect 1: Higher taxes / introduction of new taxes
Answer
Government austerity measures often lead to increased taxation as a means to reduce budget deficits. Higher VAT rates and new household taxes can decrease disposable income for citizens. This reduction in available funds can lead to decreased consumer spending, further affecting economic growth.
Step 2
Effect 2: Reduced standard of living
Answer
Austerity can also result in a lower standard of living for many. Reductions in social welfare payments and public services can leave vulnerable citizens struggling to meet basic needs. This can increase inequality and reduce overall quality of life, impacting mental and physical health.