Supply side policies

What is the primary goal of supply-side policies?

• To reduce the national debt

• To increase immediate consumer spending

• To increase the productive capacity of the economy

• To decrease the productive capacity of the economy

What macroeconomic objective does NOT directly improve with successful supply-side policies?

• Growth rates

• Unemployment rates

• Inflation rates

• Interest rates

What are the two groups of supply-side policies?

• Interventionist and market-based supply-side policies

• Domestic and international policies

• Short-term and long-term policies

• Fiscal and monetary policies

What is a key feature of interventionist supply-side policies?

• Decreasing the minimum wage

• Reducing government spending

• Promoting a larger role for the government in the economy

• Eliminating taxes

What does lower corporation tax aim to encourage?

• Higher consumer spending

• More government borrowing

• Increased investment by firms

• Reduced exports

Which of the following is NOT a market-based supply-side policy?

• Government spending on healthcare

• Lower income tax

• Privatization

• Deregulation

What is a potential negative impact of labor market reforms?

• Increased environmental protection

• Increased government spending

• Improved worker safety

• Severe impact on living standards for lower-income individuals

Why might supply-side policies be ineffective during a recession?

• Due to high interest rates

• They are too costly to implement during a recession

• Because they only affect the demand side of the economy

• Because the economy might not be at full employment

What is crucial for the success of supply-side policies?

• Immediate effects on the economy

• Reducing the role of international trade

• Increasing consumer confidence only

• Targeting chronic supply-side issues in the economy