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# Evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit
- URL: https://www.a-level-economics-tutor.com/evaluate-the-microeconomic-and-macroeconomic-effects-of-a-government-policy-of-cutting-public-expenditure-rather-than-raising-taxes-as-a-means-of-reducing-a-fiscal-deficit/
- Published: 2026-06-01T09:33:03.000Z
- Updated: 2026-06-01T09:33:03.000Z
- Author: Jaisul Naik
- Tags: Edexcel 25 Mark Question

### [Edexcel A-Level Economics Paper 3 June 2017 Insert](https://storage.ghost.io/c/ed/77/ed776ea5-c32f-46bf-aa49-8f19b6cd7ac4/content/files/2025/10/INSERT---June-2017-Paper-3.pdf?ref=tootingtutors.co.uk)

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit. (25 marks)

**Plan**

- **Paragraph 1**
  - **Argument: one microeconomic effect of cutting spending could be market failure, if the government cut subsidies**
  - **Diagram: externalities**
  - **Evaluation: there are other ways to reduce market failure such as maximum prices**
- **Paragraph 2**
  - **Argument: one macroeconomic effect of cutting spending could be a decrease in potential growth, due to spending cuts on infrastructure projects**
  - **Diagram: decrease in LRAS**
  - **Evaluation: depends on the state of the economy**

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