1. The UK government introduced a ‘scrappage scheme’ in 2009 to run for one year. Under this, motorists were given a £2000 grant towards the cost of a new car. To qualify they had to trade in a car that was more than 10 years old, which would then be scrapped. Explain how this scheme might be justified in the middle of a recession. Should there have been any restrictions on the new cars eligible for the grant?

2. Growth is largely seen as being associated with economic efficiency. Explain how it may also be an important issue when considering equity.

3. Under what circumstances will private investment be attracted to ‘green’ projects? Is there a role for government here?