Year 12 Economics AOS 2 unit 4 supply side policies [1]

Supply side policy aims to increase the aggregate supply of the economy by

• raising cost of production

• reducing the quantity and quality of resources

• raising the level of technology

• raising interest rates

Which of the following is NOT an example of supply-side policies?

• Deregulation

• Competition policies

• Retraining and upgrading workers' skills

• taxing on foreign goods

Supply side policies can lead to

• higher economic growth and lower inflation.

• higher economic growth and higher inflation.

• lower economic growth and lower inflation.

• lower economic growth and higher inflation.

What is a possible policy conflict of using supply side policies to promote greater innovation?

• higher inflation

• higher structural unemployment

• lower economic growth

• higher cyclical unemployment

Especially in the short-term, which of the government’s key macroeconomic goals is most likely to suffer as a result of using aggregate supply policies?

• Full employment

• Low inflation

• More rapid and sustainable rates of economic growth

• International competitiveness

Which statement about aggregate supply policy in Australia is incorrect?

• The immigration policy has probably resulted in higher levels of unemployment among unskilled migrants than among those born in Australia.

• National infrastructure projects including the NBN have helped to grow productive capacity and cut production costs.

• Budget outlays on education and training help to grow Australia’s productive capacity, but only in the short term.

• Government research and development grants usually help to grow technical efficiency.

Which statement about Australia’s recent immigration policy is least correct?

• It increases the demand for labour.

• It increases the supply of labour and skills available.

• It lowers the overall labour force participation rate among those with skills.

• It may aggravate environmental problems and reduces housing affordability for those born in Australia.

Aggregate supply policies usually slow inflation by:

• slowing AD and the pressures created by widespread shortages of goods and services and excess expenditure.

• reducing imported inflation caused by inefficiency overseas.

• easing cost pressures on domestic prices through boosting efficiency and competition.

• reducing society’s inflationary expectations in the short term.

Most aggregate supply policies are believed to encourage stronger and more sustainable rates of economic growth in the long term by:

• stimulating sales of Australian-made goods and services by making them more competitively priced in domestic and foreign markets.

• boosting access to resources through allocating them more effectively and using them to produce more output with fewer inputs.

• enabling firms to access cheaper inputs, thereby raising business profitability and productive capacity.

• possibly all of the above.

Which of the following statements about aggregate supply policy is most correct?

• Investment in infrastructure affects the levels of both AS and AD.

• Tax and welfare reforms can affect the levels of both AS and AD.

• Both (A) and (B) are correct.

• Neither (A) nor (B) are correct.