Demand and supply-side policies Flashcards
D&S (26 cards)
What is demand-side policy?
Demand-side policy refers to government measures aimed at influencing the level of demand for goods and services in the economy.
What is the primary goal of supply-side policy?
The primary goal of supply-side policy is to increase the productive capacity of the economy and improve the efficiency of supply.
True or False: Demand-side policies can include tax cuts and increased government spending.
True
Fill in the blank: Demand-side policies are often used to combat ______.
recession
What is an example of a supply-side policy?
An example of a supply-side policy is deregulation of industries.
Multiple Choice: Which of the following is NOT a demand-side policy? A) Fiscal stimulus B) Tax cuts C) Education funding D) Trade tariffs
D) Trade tariffs
What role does monetary policy play in demand-side economics?
Monetary policy influences demand by adjusting interest rates and controlling the money supply.
True or False: Supply-side policies focus on the demand for goods and services.
False
Fill in the blank: One aim of supply-side policies is to reduce ______ costs for businesses.
production
What is a common tool of demand-side policy?
Government spending on public services and infrastructure.
Multiple Choice: Which of the following best describes a Keynesian approach to demand-side policy? A) Emphasizing tax cuts B) Increasing government expenditure C) Reducing regulation D) Encouraging savings
B) Increasing government expenditure
What is the relationship between demand-side policies and inflation?
Demand-side policies can lead to inflation if they increase demand beyond the economy’s capacity to supply.
True or False: Supply-side policies can lead to long-term economic growth.
True
Fill in the blank: Supply-side policies often involve reducing ______ on businesses.
taxes
What is the impact of high interest rates on demand?
High interest rates typically reduce demand by making borrowing more expensive.
Multiple Choice: Which of the following is a potential drawback of demand-side policies? A) Increased national debt B) Higher productivity C) Lower unemployment D) Increased consumer confidence
A) Increased national debt
What is the main focus of demand-side economics?
The main focus is on boosting consumer demand to drive economic growth.
True or False: Supply-side policies are only concerned with tax policies.
False
Fill in the blank: Demand-side policies are often implemented during periods of ______.
economic downturn
What is one potential consequence of supply-side policies?
Increased income inequality due to benefits primarily accruing to higher-income individuals or businesses.
Multiple Choice: Which economic theory primarily supports demand-side policies? A) Monetarism B) Keynesianism C) Supply-side economics D) Classical economics
B) Keynesianism
What is the purpose of government stimulus checks in demand-side policy?
To increase disposable income and boost consumer spending.
True or False: Supply-side policies are intended to create a more competitive market environment.
True
Fill in the blank: A key characteristic of supply-side policies is the emphasis on ______ growth.
long-term
