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Is UK Government action led by the economy?
I can explain how we know if the economy is healthy and how the economy affects the UK Government.
Lesson 1 of 6
New
New
- Year 10
Is UK Government action led by the economy?
I can explain how we know if the economy is healthy and how the economy affects the UK Government.
Lesson details
Key learning points
- A healthy economy has GDP growth, low unemployment, stable inflation and strong business investment.
- In a recession, the Government may borrow money or lower taxes, while in a strong economy, it invests in services.
- Inflation is important, and the Government aims to keep it low but positive to prevent rapid price rises or slow growth.
- Taxes may be raised to control inflation in good times, and cut to boost spending in a recession.
- While areas like defence, law enforcement and elections are less affected by the economy, it still influences decisions.
Keywords
Economy - the state of a country or region in terms of the production and consumption of goods and services and the supply of money
Inflation - the rate at which the prices of goods and services rise over time, meaning money gradually loses value
Common misconception
Inflation is always a negative thing because it raises prices of goods and services.
A small amount of inflation is actually necessary to keep the economy stable and encourage spending.
To keep the lesson relevant, research the latest UK inflation rate and economic conditions beforehand so you can explain the current situation accurately to your class.
Teacher tip
Equipment
Content guidance
- Depiction or discussion of sensitive content
- Depiction or discussion of violence or suffering
Supervision
Adult supervision required
Licence
This content is © Oak National Academy Limited (2025), licensed on Open Government Licence version 3.0 except where otherwise stated. See Oak's terms & conditions (Collection 2).
Lesson video
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Prior knowledge starter quiz
6 Questions
Q1.Which member of the Cabinet is responsible for overseeing the work of HM Treasury?
Which member of the Cabinet is responsible for overseeing the work of HM Treasury?
Speaker of the House
Chief Whip
Prime Minister
Q2.What is the role of taxes?
What is the role of taxes?
to take money away from businesses and individuals with no benefit
to encourage people to spend less money
to ensure that businesses always make a profit
Q3.Fill in the blank: The main tax taken form a person's pay is known as tax.
Fill in the blank: The main tax taken form a person's pay is known as tax.
Q4.Match the terms to the correct definitions.
Match the terms to the correct definitions.
Q5.What is 'the Budget'?
What is 'the Budget'?
a monthly report on the UK’s economic performance
a list of all government debts and loans
a global agreement on economic policies between countries
Q6.What does 'VAT' stand for?
What does 'VAT' stand for?
Variable Annual Tax
Voluntary Additional Tax
Voter Allocation Tax
Assessment exit quiz
6 Questions
Q1.Match the term to its correct definition.
Match the term to its correct definition.
Q2.Fill in the blank: The UK Government may raise during strong economic times to prevent inflation from rising too fast.
Fill in the blank: The UK Government may raise during strong economic times to prevent inflation from rising too fast.
Q3.Which of the following is not a way the Government responds during a recession?
Which of the following is not a way the Government responds during a recession?
lowering taxes
borrowing money
limiting pay increases for public servants
Q4.Why might some people feel that the Government should avoid implementing austerity measures?
Why might some people feel that the Government should avoid implementing austerity measures?
It increases government debt in the long run.
It prevents inflation from rising.
It has no impact on employment levels.
Q5.Which of these is a feature of a healthy economy?
Which of these is a feature of a healthy economy?
high levels of government borrowing
sharp increases in the cost of living
decreasing business investment
Q6.How did the economy influence government action during the height of the Covid-19 pandemic?
How did the economy influence government action during the height of the Covid-19 pandemic?
All countries were equally able to buy supplies, regardless of economic status.
Governments reduced healthcare spending to focus on other priorities.
Governments avoided spending money during the pandemic to prevent debt.
