Supply side policy

Question 1

supply side policies

Answer 1

This is the government implementing policies to try to increase aggregate supply by making the economy more productive

Question 2

tax reforms

Answer 2

reducing taxes for individual and businesses can positevely impact AS in two ways:

• lowering cost of production
• income taxes serve as disincentive to work

Question 3

trade liberalization

Answer 3

• protectionism

- supply side effect

Question 4

the laffer curve

Answer 4

This is a graph that shows the pattern between tax revenue, tax rates, and income

Question 5

labor market reforms

Answer 5

A type of policy that can be set to increase aggregate supply

Question 6

minimum wage

Answer 6

This is the minimum that the government sets in order to protect workers from firms. It is the minimum amount that firms can pay for labor.

Question 7

union power

Answer 7

This is a group of workers that protects the safety and treatment of workers by firms

Question 8

deregulation

Answer 8

When the government decreases how strictly they implement their policies to encourage more investment

Question 9

investment in human capital

Answer 9

When the government spends money in order to improve the productivity of the work labor such as training

Question 10

investment in physical capital

Answer 10

This is the government investing in one of the factors of production. It can include land or labor or natural resources

Question 11

evaluating supply side policies

Answer 11

• increase inequality
• environmental cost
• political realities