Supply Side

Question 1

Incentive

Answer 1

Payment to stimulate greater output and investment

Question 2

What does supply side policies do

Answer 2

Create structural changes to economy to become more efficient and more productive

Question 3

What are free market policies

Answer 3

Privatisation
Deregulation
Tax cuts

Question 4

What are the interventionists policies

Answer 4

Improve education
Subsidies for R&D
Improvements to infrastructure

Question 5

What is the effect of supply side policies

Answer 5

Turn economy more flexible

Question 6

What can help increase efficiency

Answer 6

Incentives for firms to invest e.g. tax breaks

Trade liberisation

Question 7

How is competition encouraged

Answer 7

Privatisation
Deregulation
Provide support to smaller firms

Question 8

How do you increase demand for employment

Answer 8

Reduce benefits - people search for jobs for more income

Reduce income tax - earn more

Question 9

Benefits of supply side policy

Answer 9

Unemployment falls if LRAS increases

Cost push inflation reduced due to efficiency - price level falls

Improvement to BoP - international competitiveness

Question 10

Drawbacks of supply side policy

Answer 10

Takes a long time to work

Unintended consequences - covid

Unpopular - reduction of benefits