Exam code: 0455 & 0987
A government aims to reduce unemployment through a supply-side policy measure.
Which measure would it use?
It would increase government spending.
It would increase tariffs on imported goods and services.
It would introduce retraining schemes.
It would reduce the rate of interest.
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Which government policy measure would cause an increase in a country’s supply of labour?
increasing unemployment benefits
lowering interest rates
raising income tax
raising the age of retirement
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1 markWhat do supply side policies mostly focus on?
Increasing government spending
Shifting aggregate demand
Boosting the productive capacity of the economy
Controlling inflation through interest rates
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1 markWhich of the following is an example of a supply-side policy?
Increasing government spending on public goods
Implementing expansionary monetary policy
Lowering personal income tax rates
Reducing interest rates to stimulate borrowing
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1 markWhich of the following is a potential drawback of supply-side policies?
Excessive government spending
They have no impact on economic growth
They often result in higher inflation rates
They focus on income redistribution over economic efficiency
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Why does more emphasis on education and training lead to an increase in national output?
It improves the productivity of the labour force.
It lowers the inputs of capital investment.
It reduces demands for higher pay.
It reduces the power of trade unions.
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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
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1 markWhat does deregulation as a supply-side policy measure involve?
Increasing government control over businesses
Implementing strict price controls
Reducing government intervention and regulations on businesses
Expanding government welfare programs
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1 markWhich of the following is a supply side policy aimed at encouraging research and development?
High tariffs on imports
Increasing government subsidies for consumers
Reducing corporation tax
Implementing strict price controls
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1 markHow is an increase in the total supply of an economy shown on a PPC diagram?
Inward shift
No change in PPC
Change from consumer to capital goods
Outward Shift
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How would government spending on education be classified?
| fiscal policy | monetary policy | supply-side policy |
A B C D | no no yes yes | no yes no yes | yes no yes no |
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1 markWhich of the following is not a labour market reform supply-side policy?
Decreasing trade union power
Removing government controls from markets
Decreasing minimum wages
Increased government spending for occupational mobility
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1 markHow does reducing business taxes contribute to the government's macroeconomic objectives?
It directly controls inflation rates
It increases government expenditure
It stimulates business investment and economic growth
It decreases government revenue
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1 markHow can privatisation contribute to economic growth as a supply-side policy measure?
Increasing government spending on public projects
Reducing international trade activities
Promoting competition and efficiency in industries
Imposing strict price controls on goods and services
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1 markHow can vested interests limit the success of supply-side policy measures such as privatisation?
By encouraging open competition among industries
By promoting innovation and entrepreneurship
By resisting changes that threaten established benefits
By facilitating efficient resource allocation
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