Supply Side Policy

Question 1

What does NAIRU stand for? And what is it

Answer 1

Non- accelerating inflation rate of unemployment.

That is the rate of unemployment at which the rate of inflation is stable

Question 2

What is frictional unemployment?

Answer 2

This is where people are looking for jobs and there’s friction between who gets them

Question 3

What is structural unemployment?

Answer 3

Where a persons skill set is no longer needed in a work place

Question 4

What is cyclical unemployment?

Answer 4

Unemployment due to a period of negative economic growth, or economic slowdown

Question 5

What line on a graph show the NIARU?

Answer 5

LRAS

Question 6

What is voluntary unemployment?

Answer 6

Unemployment due to members of the workforce who are able to work but not willing at the market wage rate

Question 7

What is the natural rate of unemployment?

Answer 7

The level of unemployment that persists in a stable economy and includes structural and frictional unemployment

Question 8

What are interventionist supply side policies?

Answer 8

Strategies that increase AS by increasing Gov intervention

Question 9

What are market-based supply side policies?

Answer 9

Strategies that aim to increase AS by reducing Gov intervention in order to promote a free market