Fast Stream Policy Analysis 2

Question 1

The Government is considering introducing a graduate tax to replace student loans. Which stakeholder group is MOST likely to oppose this change?

Accepted Answer

High-earning graduates who would pay more over their lifetime than under the current loan system

Answer

A graduate tax typically has no cap on total payments, unlike student loans which are written off after 30 years. High-earning graduates could end up paying significantly more over their career than the original loan amount, making them the most likely group to oppose the change.

Question 2

A minister asks for advice on whether to introduce a sugar tax. Your analysis should include a consideration of regressive impacts. What does 'regressive' mean in this policy context?

Accepted Answer

The policy would take a proportionally larger share of income from lower-income households than from higher-income households

Answer

In fiscal policy, 'regressive' means the burden falls disproportionately on those with lower incomes. Since lower-income households spend a higher proportion of their income on food and drink, a sugar tax would take a larger percentage of their income, even though they pay the same absolute amount.

Question 3

A policy team proposes using Randomised Controlled Trials (RCTs) to test a new approach to reducing benefit fraud before national rollout. Which is the most valid objection to this methodology in this context?

Accepted Answer

There are ethical concerns about providing different levels of service to citizens in a control group versus a treatment group

Answer

While RCTs are the gold standard for causal evidence, their use in public policy raises legitimate ethical questions about treating citizens differently. If the treatment group receives a better service, denying it to the control group raises fairness issues. This is a genuine tension in evidence-based policymaking.

Question 4

The UK's post-Brexit trade policy involves negotiating bilateral trade agreements. Which economic concept is most relevant when assessing whether a trade deal with Country X might harm UK trade with Country Y?

Accepted Answer

Trade diversion

Answer

Trade diversion occurs when a preferential trade agreement causes imports to shift from a more efficient producer to a less efficient one that benefits from lower tariffs. If a UK-Country X deal diverts trade away from Country Y (which may be more efficient), the net economic impact could be negative.

Question 5

A Civil Service policy paper recommends investing £500 million in flood defences. The paper states the investment would prevent an estimated £2 billion in flood damage over 50 years. A senior official questions the reliability of this estimate. Which factor introduces the MOST uncertainty into the £2 billion figure?

Accepted Answer

The difficulty of predicting climate change impacts on flood frequency and severity over a 50-year time horizon

Answer

Projecting climate impacts 50 years ahead involves enormous uncertainty. Flood frequency and severity depend on global emissions trajectories, regional climate patterns, and tipping points that are inherently difficult to predict. While other factors involve uncertainty, the 50-year climate projection introduces the greatest analytical challenge.

Fast Stream Practice Test

Fast Stream Practice Test

Fast Stream Policy Analysis 2