Revision 3: Supply Side Policies Quiz1

How can improving education and vocational training help increase productivity?

• By increasing the cost of labor force

• By improving the quality and quantity of labor force

• By reducing the quantity of labor force

• By decreasing the quality of labor force

What is the impact of spending on health on the economy?

• It has no impact on productivity

• It decreases productivity by increasing the hours lost to illnesses

• It increases productivity by improving the health of the population

• It decreases productivity by increasing the cost of health services

How can investment in housing contribute to increasing output?

• By decreasing the availability of housing spaces

• By increasing geographical mobility of the population

• By increasing government control over housing

• By decreasing geographical mobility of the population

What is the potential impact of privatization on output?

• It decreases efficiency but increases output

• It increases efficiency and output

• It has no impact on efficiency and output

• It decreases efficiency and output

The government increases taxation in order to fund an increase in spending on government
training schemes.
Which policy combination would this involve?

• fiscal policy and monetary policy only
  

• fiscal policy and supply-side policy only
  

• monetary policy and supply-side policy only
  

• monetary policy, supply-side policy and fiscal policy

A government uses different supply-side policy measures to improve economic performance.
Which policy measure would not satisfy one of the government’s macroeconomic aims?

• changing the tax system which leads to more tax evasion
  

• encouraging foreign investment which improves the balance of payments
  

• privatising state industries which increases economic growth
  

• retraining redundant workers which lowers unemployment

A government retrains unemployed industrial workers to increase employment opportunities. The
policy may have adverse effects on other government macroeconomic aims.
What illustrates this situation?

• Better skilled workers may increase productivity and improve economic growth.
  

• Increased wage-earning capacity may lead to demand-pull inflation.
  

• More employed workers may reduce government expenditure on benefit payments.
  

• Near full employment may result in a more stable balance of payments.

Which government action will not add directly to the quantity or quality of human resources?

• improvement in health facilities
  

• investment in education and training
  

• provision of better food and nutrition
  

• reclamation of land from the sea

A country wishes to encourage economic growth.
Which policy measure is most likely to achieve this aim?

• increasing interest rates
  

• increasing spending on education
  

• reducing the maximum permitted hours of work
  

• reducing spending on infrastructure

Which government policy will increase productivity?

• decreasing the number of training programmes
  

• encouraging labour-intensive production
  

• promoting good industrial relations
  

• reducing private sector investment

Answer explanation

Promoting good industrial relations (Option C) is likely to have a positive impact on productivity. Good industrial relations involve fostering a positive and collaborative relationship between employers and employees. When there is a harmonious and cooperative working environment, it can lead to increased employee satisfaction, motivation, and engagement. This, in turn, can boost productivity.