Intervenionist quiz

Which group of policies fully includes interventionist supply side policies?

• Industrial policy (targeted subsidies on women run businesses/rural/SMEs etc), government spending on health care, education, infrastructure and housing

• Industrial policy (targeted subsidies on women run businesses/rural/SMEs etc), government spending on health care, education, infrastructure and housing, labour market reforms

• Industrial policy (targeted subsidies on women run businesses/rural/SMEs etc), government spending on health care, education, infrastructure and housing, privatisation

What is a limitation of interventionist supply-side policies?

• Increased innovation trends and positive externalities in terms of job creation

• Negative externalities: he industrial development into infrastructure, transportation, and construction often result in increased pollution to the environment.

• Government incompetence and productive inefficiency always

Why is currency depreciation happening in Sub-Saharan African nations?

• Lower exports of crude oil (accounting for 90% of Nigeria’s export income): External variables, such as swings in world oil prices, can have a considerable influence on Nigeria's economy, which is primarily reliant on oil export earnings. Oil prices fell sharply in 2023, putting pressure on the Nigerian naira and resulting in devaluation versus the US dollar.

• Lower imports of crude oil (accounting for 90% of Nigeria’s export income): External variables, such as swings in world oil prices, can have a considerable influence on Nigeria's economy, which is primarily reliant on oil export earnings. Oil prices fell sharply in 2023, putting pressure on the Nigerian naira and resulting in devaluation versus the US dollar.

• Lower inflation

What is a potential negative effect of currency depreciation?

• Reduced debt servicing costs

• Increased foreign investment: Lower nigerian currencies attract exports and investments therein

• Cost-push inflation: Domestic firms that rely on imported supplies may face increased production costs if the value of their currency falls.

What is the proposed policy for South Sudan to address economic issues?

• Alternative dispute resolution

• Increased government spending on capital imports only

• Development of the mining sector: develop the mining sector to readily extract minerals such as lithium, gold, copper, diamonds, and iron for exports to foreign firms.

What is the suggested policy for Kenya to combat currency devaluation?

• Fiscal discipline in terms of controlling the budget deficit

• Kenya Association of Manufacturers (KAM) advocated the policy to chase export-led growth economy only in agriculture

• Pro-poor policies that seek to reduce poverty along side market based policies so that local small industries can targeted support such as minimum wages or tax reforms

What is the effect of successful supply-side policies on investment?

• Lowered economic growth despite supply-side policies that encourage research and development, innovation, and technology transfer can assist nations in adopting more modern manufacturing processes and increasing their worldwide market competitiveness. This can result in better efficiency, higher-quality goods, and economic diversification away from conventional sectors

• Increased government expenditure has resulted in Public Debt: Sub-Saharan Africa's public debt has expanded dramatically over the previous decade as a result of fiscal slippages, a series of shocks such as the COVID-19 epidemic, climate-related catastrophes and natural disasters, and high international food, fuel, and fertiliser prices.

• Increased economic growth as imports increased with the production of domestic goods increasing, placing Kenya on the global market as an expensive source of goods produced, thus potentially generating export revenue and promoting economic growth

What is a criticism of supply-side policies by skeptics?

• Increased income inequality

• Enhanced economic growth

• Reduced government expenditure

What is a key alternative resolution suggested for economic issues?

• Increased government intervention

• Structural adjustment programs along-side market based policies

• Market liberalization

What is the purpose of the Agriculture for Industry (A4I) Initiative in Kenya?

• Boost food imports

• Increase government spending

• PrPromote food production but the growth in consumer spending generally depends on confidence in the economy which is low