4.2.5.2 Supply-side policies NOTES

What do supply-side policies primarily aim to improve?

• Consumer demand

• Government revenue

• Productive capacity and efficiency

• Monetary stability

Which of the following is an example of a supply-side policy?

• Increasing welfare benefits

• Consumer subsidies

• Tax cuts

• Raising interest rates

What is a direct result of effective supply-side improvements?

• Higher inflation

• Increased productivity

• Increased taxation

• Decreased competitiveness

How do tax incentives for R&D affect the economy?

• Reduce educational funding

• Increase consumer prices

• Encourage investment in innovation

• Decrease public spending

What role does deregulation play in supply-side policies?

• Increases trade tariffs

• Lowers minimum wage standards

• Reduces regulatory burdens on businesses

• Increases government control

Which policy is aimed at improving the external performance of an economy?

• Social welfare programs

• Consumer price controls

• Interest rate adjustments

• Export-oriented policies

What is the impact of labour market reforms under supply-side policies?

• Decrease in workforce skills

• Enhancement of labour market efficiency

• Increase in unemployment

• Reduction in labour market flexibility

Which of the following is a characteristic of interventionist supply-side policies?

• Reduction of public sector investment

• Government spending on education and training

• Privatization of state-owned enterprises

• Minimal government intervention

What effect do supply-side policies have on inflation?

• They have no impact on inflation

• They can mitigate inflationary pressures

• They solely focus on deflation

• They generally increase inflation

Which measure is likely to reduce the natural rate of unemployment?

• Reducing education funding

• Expanding government bureaucracy

• Increasing income taxes

• Flexible employment arrangements