Supply-Side Policies

Which of the following supply-side policies is less likely to have demand-side effects?      

• reducing unemployment benefits

• reducing labour union power

• provision of infrastructure

• industrial policies

Privatization involves

• the sale of private businesses to the public sector

• the sale of public sector businesses to the private sector

• the production of public goods by the private sector

• the sale of public goods by the private sector

The objective of supply-side policies is to:

• increase potential output and achieve economic growth

• increase long-run aggregate supply and full employment output

• stimulate the supply side of the economy to achieve economic growth

• all of the above

Interventionist supply-side policies:

• try to make the economy able to produce more

• involve taxes and subsidies to correct market failures

• involve taxes and subsidies to improve income distribution

• try to develop free competitive markets

Which of the following are not market-based supply-side policies?

• policies to encourage competition, such as privatization and deregulation

•   labour market reforms, such as lowering minimum wages and reducing unemployment benefits

• industrial policies, such as low interest loans, grants and subsidies

• policies to change incentives facing economic decision-makers, such as reducing taxes

A drawback of most supply-side policies is that they:

• increase unemployment

• increase inflation

• often take effect ater a long time

• have opportunity costs of government spending

Labour market reforms are unlikely to include which of the following measures?

• lower the minimum wage

• increase unemployment benefits

• reduce job security by making firing and hiring easier

• reduce labour union power

Supply-side policies to encourage competition are unlikely to include which of the following measures?    

• privatization

• deregulation

• anti-monopoly regulation

• nationalization

Which of the following is unlikely to be among the advantages of interventionist supply-side policies?  

• new job creation

• support of key areas that are important for growth, such as human capital and R&D

• creation of incentives for more work 

• downward pressure on inflation due to increase in LRAS

Which of the following is unlikely to be among the advantages of market-based supply-side policies?

• more equal distribution of income

• downward pressure on inflation due to increase in LRAS

• improved efficiency in production

• improved allocation of resources