Supply Side Policy

What is the meaning of supply-side policy in terms of its effects on LRAS curves?

• Measures designed to decrease aggregate supply by reducing the quality and quantity of resources in an economy

• Policies design to increase the productive capacity of the economy, shifting LRAS to the right

• Policies design to decrease the productive capacity of the economy, shifting LRAS to the left

• Measures designed to increase aggregate demand by increasing the quality and quantity of resources in an economy

What are the objectives of supply-side policy?

• To decrease productivity and productive capacity

• To increase unemployment and reduce real output

• To decrease national income and the price level

• To increase productivity and productive capacity

Initiatives which are intended to increase the economy's ability to produce and supply goods and services by modifying economic incetives.

• Supply Side Policy

• Free Market Approach

• Productive capacity

• Fiscal Policy

A reduction in labour market flexibility will result in an increase in an economy's productive capacity.

• True

• False

Which one of the following policies would be most likely to cause an outward shift in the LRAS curve?

• An increase in the national minimum wage

• An increase in income tax for low earners

• New tax incentives to encourage consumers to save more

• Tighter immigration controls which results in a fall in net migration

Which of the following policies would NOT be defined as a supply side policy?

• An increase in the stock of money to support lending across the real economy

• Increased government expenditure on education and training programes

• Devaluating the local currency to provide a competitive boost to an economy's exports

• Decreased government day to day expenditure on supporting the unemployed in society

Supply side policies aim at

• increasing AD

• increasing potential output

• decreasing LRAS

• increasing taxation

The production potential of the economy will increase if there is more___ in the economy.

• people

• tax

• investment

• regulation

Government can reduce taxation on in an attempt to investment.

• profit, decrease

• profit, increase

• unemployed, increase

• unemployed, decrease

Which of the following best improve the flexibility of labor in a market?

• Higher Wages

• Better Education and Training

• Wages Council

• All of the answers