Supply-Side Policies 2

Question 1

Policies to attract FDI

Answer 1

Attractive corporation tax
Flexible labour
Open capital markets (allow remitted profits)

Question 2

What are market-based supply-side economies

Answer 2

Policies that focus on reducing the size of the state and in extending the role of market forces in allocating resources

Question 3

Examples of market-based supply-side policies

Answer 3

• cut gov spending
• low business taxes
• privatisation of state assets
• opening up of an economy

Question 4

Benefits of net inward migration

Answer 4

Skills
Innovation / entrepreneurship
Positive multiplier
Remittances sent home 
Tax revenues

Question 5

Risks / costs from net inward migration

Answer 5

Welfare costs 
Displacement of domestic workers
Social tensions
Demand for houses (increase prices)
Puberty risk

Question 6

Evaluating the economic effects of labour migration

Answer 6

Depends on:
Type of people
Ease of settlement
Dynamic gains 
Long or short term

Question 7

How to reduce occupational mobility

Answer 7

• funding for training
• teaching new skills
• expansion of apprenticeship programmes

Question 8

How to improve geographical mobility

Answer 8

Rise in house-building to keep property prices lower and encourage more affordable rents

Question 9

Reasons for the long term decline in trade unions (UK context)

Answer 9

• legislation removed/reduced many of their powers on strikes etc
• rise in flexible labour markets
• de-industrialisation
• globalisation = monolingual powers of TNCs (decreased bargaining power of employees)