3.3-Supply Side Policy

Question 1

What is supply-side policy?

Answer 1

Supply-side policy refers to economic strategies aimed at increasing productivity and shifting the aggregate supply curve to the right.

Question 2

True or False: Supply-side policies focus primarily on increasing demand in the economy.

Answer 2

False

Question 3

Name one key objective of supply-side policies.

Answer 3

To increase the potential output of the economy.

Question 4

What is meant by ‘aggregate supply’?

Answer 4

Aggregate supply is the total supply of goods and services that firms in an economy plan to sell during a specific time period.

Question 5

Fill in the blank: Supply-side policies can include tax _____ to encourage investment.

Answer 5

cuts

Question 6

What is one example of a supply-side policy?

Answer 6

Investment in education and training.

Question 7

True or False: Supply-side policies can help reduce unemployment.

Answer 7

True

Question 8

How can deregulation act as a supply-side policy?

Answer 8

Deregulation can reduce barriers to entry for firms, encouraging competition and innovation.

Question 9

What is the relationship between supply-side policies and economic growth?

Answer 9

Supply-side policies aim to enhance economic growth by increasing productive capacity.

Question 10

What is a potential drawback of supply-side policies?

Answer 10

They may increase income inequality.

Question 11

Fill in the blank: Supply-side policies often require significant _____ investment.

Answer 11

capital

Question 12

True or False: Supply-side policies can lead to inflation if not managed correctly.

Answer 12

True

Question 13

What role does innovation play in supply-side policies?

Answer 13

Innovation drives productivity improvements and can lead to economic growth.

Question 14

What is a labor market reform?

Answer 14

Labor market reforms are changes aimed at enhancing the efficiency of the labor market, such as reducing employment protection legislation.

Question 15

What is the impact of supply-side policies on taxation?

Answer 15

Supply-side policies often involve reducing taxes to incentivize work and investment.

Question 16

Fill in the blank: Supply-side policies aim to increase _____ by improving the efficiency of industries.

Answer 16

competitiveness

Question 17

What is the potential effect of supply-side policies on public services?

Answer 17

Supply-side policies may lead to cuts in public services to reduce government spending.

Question 18

True or False: Supply-side policies can only be implemented by the government.

Answer 18

False

Question 19

What is the significance of infrastructure investment in supply-side policies?

Answer 19

Infrastructure investment improves productivity by facilitating better transportation and communication.

Question 20

What does ‘flexible labor markets’ mean in the context of supply-side policies?

Answer 20

Flexible labor markets allow for easier hiring and firing practices, promoting job creation.

Question 21

Fill in the blank: Supply-side policies are often associated with _____ economics.

Answer 21

neoliberal

Question 22

What is one criticism of supply-side policies?

Answer 22

They may disproportionately benefit the wealthy.

Question 23

How does education contribute to supply-side policy effectiveness?

Answer 23

Education enhances human capital, leading to a more skilled workforce.

Question 24

What is ‘capital formation’?

Answer 24

Capital formation is the process of building up the capital stock of a country through investing in productive plants and equipment.

Question 25

True or False: Supply-side policies can be short-term solutions to economic problems.

Answer 25

False

Question 26

What is the goal of privatization in supply-side policy?

Answer 26

To improve efficiency and reduce government expenditure.

Question 27

What is one way supply-side policies can enhance productivity?

Answer 27

By investing in technology and research and development.

Question 28

Fill in the blank: Supply-side policies often encourage _____ through tax incentives.

Answer 28

investment

Question 29

What is the effect of reducing business regulations on supply-side policies?

Answer 29

It can lower costs for businesses, encouraging expansion and job creation.

Question 30

True or False: Supply-side policies are primarily focused on short-term economic stabilization.

Answer 30

False

Question 31

What is the role of trade liberalization in supply-side policy?

Answer 31

Trade liberalization can increase competition and access to markets, enhancing economic efficiency.

Question 32

What does 'human capital' refer to?

Answer 32

Human capital refers to the skills, knowledge, and experience possessed by an individual or population.

Question 33

Fill in the blank: Supply-side policies can lead to increased _____ efficiency.

Answer 33

allocative

Question 34

What is the impact of supply-side policies on wages?

Answer 34

They can lead to higher wages if productivity increases.

Question 35

What is the significance of technological advancement in supply-side policies?

Answer 35

Technological advancements can lead to more efficient production processes and innovative products.

Question 36

True or False: Long-term growth can be achieved solely through demand-side policies.

Answer 36

False

Question 37

What is the potential impact of supply-side policies on the environment?

Answer 37

They may lead to environmental degradation if not properly regulated.

Question 38

Fill in the blank: Effective supply-side policies require a stable _____ environment.

Answer 38

macroeconomic

Question 39

What is one way government can support supply-side policies?

Answer 39

By providing subsidies for research and development.