U4 AOS2 - Aggregate Supply-Side Policies Flashcards
True/False: Aggregate supply-side policy can create non-inflationary growth
True
How does an increase in the childcare subsidy increase aggregate supply?
Through increasing the availability of labour resources
OR
Increasing labour productivity
How do subsidies impact international competitiveness?
When applied: lower COP and therefore increased IC
When removed: decreased IC
How can skilled migration negatively impact living standards?
Decreased social cohesion
Increased environmental damage
Why does an increase in skilled migration improve productivity?
Migrants come with existing skills and talents and can create more outputs per unit of input.
True/False: A decrease in skilled migration will make it more difficult to achieve the goal of strong and sustainable economic growth.
True
Aggregate supply side policies aim to impact the _________ and __________ of businesses to produce
Ability and willingness
The balance of resource use between the current needs and wants and future needs and wants.
Intertemporal efficiency
An emissions trading scheme is a
Market based environmental policy where carbon credits are able to be sold by businesses based on the forces of supply and demand.
In short term an emissions trading scheme is likely to __________ inflation
Increase
In the long term, environmental policies are likely to __________ living standards
Improve
Trade liberalisation refers to
The removal of tariffs and barriers to trade between nations
In the short term, how does trade liberalisation impact unemployment?
Increased structural unemployment.
In the short term, how does trade liberalisation impact inflation?
Decreased cost inflation, or potentially increased demand inflation
In the long term trade liberalisation should increase efficiency because…
Businesses are likely to reallocate resources towards areas of competitive cost advantage.
