1. A normative statement is an untestable opinion made by an individual. An example of this from this extract would be "[Labour's general election manifesto has promised to] raise the proportion of national income spent on education". This obviously cannot be tested because the size of the "raise" has not been disclosed. A normative statement involves a value judgement.

A positive statement is a statement which can easily be tested (a percentage for example). In the extract it states that "The money will come on stream over the next three financial years: £3bn in 1999-2000, £6bn in 2000-2001 and £10bn in 2001-2002". This can easily be tested.

2.A PPF helps economists to rationalise the direct relationship involved in using scarce resources to make one product against making another. Obviously resources are limited and therefore every action has a cost in terms of what you cannot now use the resources for (opportunity cost)

3. What does the Chancellor mean when he states that government spending on education will go up in real terms? (3 marks)
Gordon Brown means money spent on education will go up including inflation (roughly 2% per annum). Spending must therefore increase by more than 2%. Often politicians claim to have increased spending by such and such amount and in real terms this is often a lot smaller increase and in some cases even a decrease in spending due to inflation.

4/5

6. What should happen to the PPF if Government spending on education is effective in improving the quality and efficiency of the workforce? (3 marks)

The efficiency will only approve in one sector which means the PPF will only grow in one direction and will reach the x-axis at the same point.

7.Spending money on Education would decrease the possibility of money spent on other governmental departments. This loss of possible gain is a cost, an opportunity cost. (e.g. for every new teacher you train you lose a certain amount of doctor training capabilities).
The NHS is in major need of funding. Hygiene has become a major issue recently (with MRSA still rife within hospitals). Also waiting times have come under attack and the government is considering subsidising the private sector to help consumers to pay for private health care. This all requires money, money forgone by spending more on education.

Assess the economic arguments in favour of opening the NHS to a less centralised and more free market form of funding (12 marks)

A free market funded health service would undoubtedly reduce pressure on the already crumbling NHS. This free market incentive (allow people to decide to receive government-subsidised private health care at a little cost to themselves). This option would obviously be available to those who can afford it and some people believe that it would be unfair on those who can't, to provide better health care to the rich. However, people who uphold this arguement are met with the fact that releasing pressure on the NHS would provide better services for those who do receive government health care.

This system could help cut waiting times for operations altho encouraging people to recieve private health care when the NHS offers it for free would be a hard initiative in its self.

In the current system, older people are frequently refused treatment so that treatment can be given to people who will make better use of it and are more likely to recover. In a less centralised, more free market based health service, there would be more capacity for treatment and so a wider demographic can be offered medical assistance.

A major problem with a privatised health service would be that the health service can up prices after the government has become dependant on them. This would force greater public expenditure on subsidisation of medical bills and would take money away from the NHS anyway.

1)How does the text relate to the three key questions that are at the heart of the 'economic problem'?

The 3 economic problems are,
-What goods and services to provide?
-How best to produce the goods/services the best way?
-Who is to receive these services?

The NHS is a crucial part of British Society, it helps cater to those who need it most (generally the lower economic demographic of society). If we move towards privatisation this could leave many people who cannot afford health care to struggle with their various ailments. The state has a moral duty to protect these people. Therefore we cannot complete privatise the health service. However, partial privatisation could prove very useful in the long term. The question is; how much do we privatise?

There is already partial privatisation (companies like BUPA offer private health care to those willing to pay for it). But these services are costly and the only way the government can bring the prices down (therefore encourage more people to adopt their services) is to subsidise the private sector. This leaves you with the same situation of low funds. Funding the private sector partially could lead to greater growth in the sector and more money being spent to bring prices down. This would eventually lead to the end of government subsidisation and hopefully would involve a lot more people using the private sector. Some of the money spent on private healthcare would go back to the government via tax and this can then be put towards bettering the NHS. After the end of government subsidisation however, the private sector could raise their prices again, this would leave the government with not enough money to pay for everyone's healthcare and would force them to subsidise the high prices of the private sector.

2)What are the opportunity costs involved in deciding on appropriate levels of health care?

Opportunity costs are the actual costs (in terms of what you could have bought with the money spent on the other item). In this case, government money (from taxes) is being poured into the NHS when other sectors like education and defence have to recieve less money. For example, money spent to keep a hospital bed for a year (roughly £50000) could be spent on new text books for a deprived inner-city school. The government weighs up these costs and informs the public when the chancellor of the exchequer does his annual finance report. Different political parties will spend differently and as a voter you indirectly affect the money that is spent on institutions like the NHS and therefore have a responsibility to assess all the options and decide which policies you think are not only right for you, but are right for society as a whole.

3)How does the text suggest that there may be alternative answers to the issue of the provision of health in the UK?

The text suggests that we could
1. privatise the NHS, much like the American system. This would save the government money and in the long run ease the pressure on any remaining NHS practises, but threatens to leave people who are incapable of paying medical bills with huge debts after receiving crucial medical treatments. It could also lead to people suffering with ailments in order to save money.

OR

2. Raise taxes and use the money to fund more NHS staff. This however could lead to even more problems, as more people with less money will turn to fast food and raise already high obesity rates even more. A sugestion of a "Social Insurance Fund" is made, but this is basically like raising income tax. The name makes no difference apart from the money is directly given to the health service. This benefit is completed negated by the fact that the government decides tax rates and therefore can still put however much money into the NHS it wants.