Syllabus: SQA - Higher Course Spec Economics
Module: UK Economic Activity
Lesson: Government Policies
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Introduction
This lesson supports the SQA Higher Economics specification under the “UK Economic Activity” strand. It focuses on how government policies impact economic activity in the UK, with particular emphasis on taxation, spending, inflation, and employment. The topic is crucial for helping students connect macroeconomic theories to the realities of policy-making and public finance.
Teaching this topic gives learners a grounded understanding of how economic goals—like growth and price stability—are pursued in practice. It’s also an opportunity to embed wider economic literacy that supports real-world thinking, civic awareness, and future study.
Key Concepts
Aligned with the SQA specification, students should be able to:
Explain government sources of income, including direct and indirect taxation.
Describe government spending categories (current, capital, transfer payments) and their purposes.
Understand the circular flow of income in a closed economy.
Identify the UK Government’s economic aims: low inflation, high employment, and sustainable growth.
Define and measure inflation and unemployment using standard indicators.
Explore the causes and effects of inflation and unemployment on individuals, businesses, and the economy as a whole.
These are scaffolded into skills of applying knowledge to real-life examples, evaluating policies, and drawing conclusions from economic data.
Real-World Relevance
Recent government decisions offer clear teaching hooks:
The UK’s response to inflation in 2022–24, including adjustments to interest rates and energy subsidies.
The use of furlough schemes during the COVID-19 pandemic as a real-world case of transfer payments supporting employment.
Scotland’s devolved budget allocations and how fiscal policy differs slightly within the UK context.
You can also bring in the current debate on public sector pay and NHS funding as practical examples of trade-offs in government spending.
Mini case study idea: Compare the impact of increased corporation tax vs income tax freezes on different economic groups.
How It’s Assessed
In the Higher exam, students will need to:
Demonstrate understanding of government income and spending, including types and purposes of taxes and expenditures.
Use economic terminology accurately and interpret basic economic data.
Apply knowledge to short-answer and extended response questions that require explanation, evaluation, and drawing reasoned conclusions.
Expect command words like:
“Describe” (factual knowledge)
“Explain” (understanding and application)
“Evaluate” (judgement and critical analysis)
Pupils should practise structuring responses that go beyond definitions, using examples and linking back to economic objectives.
Enterprise Skills Integration
This topic naturally builds critical enterprise skills:
Problem-solving: weighing up policy options in scenarios (e.g. tax rises vs spending cuts).
Decision-making: assessing trade-offs in government aims (e.g. inflation control vs employment).
Communication: clearly presenting economic reasoning and explaining consequences for different stakeholders.
You might run a policy simulation where students act as Treasury advisors, making budget decisions and justifying them to their peers.
Careers Links
This topic links directly to Gatsby Benchmarks 4, 5 and 6:
Careers in economics, public policy, and finance all rely on this knowledge.
Students gain insight into roles such as policy analysts, government economists, civil servants, and local government planners.
Invite speakers from local councils or economic development teams to discuss real budget decisions.
It also supports employability by building data literacy, evaluative thinking, and communication skills relevant to business, law, and social sciences.
Teaching Notes
Tips for delivery:
Start with a household budget analogy to introduce taxation and spending.
Use real news clips to discuss inflation trends and unemployment data.
Give students scaffolded practice in interpreting tables or charts on government budgets.
Common pitfalls:
Students often confuse types of taxation or misapply causes of inflation.
Misunderstanding of the circular flow model can weaken more complex analysis—revisit this early.
Extension ideas:
Debate: “Should governments prioritise employment or inflation control?”
Task: Design a weekly budget for a government department and justify spending priorities.
Plug-and-play resource ideas:
Use data from ONS or Scottish Government’s budget site.
Assign students to track headlines over a week and classify stories under different government aims.
