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Exam 31: Supply-Side Policy

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Question 21

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Which of the following is an example of interventionist supply- side policy?

A) Income tax cuts
B) Cutting unemployment benefits so as to encourage more people to accept job offers
C) Increased government expenditure on transport infrastructure
D) Deregulation

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Question 22

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Give an example of demand- side policy which has supply- side effects. Explain.

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Government expenditure on rese...

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Question 23

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According to supply- side economists, as tax rates are reduced, labour supply should increase. This implies that

List three market- orientated supply- side policies which might be used to move the production possibility curve outwards.

Which of the following beneficial supply- side effects is not claimed to occur following cuts in the marginal rate of income tax?

Regional multiplier effects add to migration effects into more prosperous regions through the creation of additional jobs in response to higher demand.

Two supply- side policies to cure inflation are anti- monopoly legislation and prices and incomes policies.

Which of the following is an argument against interventionist industrial policy?

A cut in welfare benefits will have no effect on the speed with which individuals find work.

Although governments in most industrialised countries do not engage in national economic planning, virtually all intervene selectively in order to bring supply- side improvements.

Two examples of market- orientated supply- side policies are income tax cuts and deregulation.

Tax cuts are likely to increase incentives for firms and individuals to expand their activities within the economy.

List three supply- side policies which might be used to move the production possibility curve outwards.

Offering local facilities and improvement of local infrastructure for potential new business is a market- oriented policy.

If aggregate demand is constant, a supply- side policy that successfully increases potential output is likely to result in lower unemployment.

Which of the following were part of the Thatcher and Major governments' approach to regional policy? (a) Increasing government expenditure on regional assistance in real terms and targeting it more carefully Yes/No (b) Increasing government expenditure on regional assistance in money terms and targeting it more carefully Yes/No (c) Making regional assistance more cost- effective Yes/No (d) Abolishing Regional Development Grants (which were automatically available to firms in development areas) Yes/No (e) Abolishing Regional Development Assistance (which was granted at the discretion of the government) Yes/No (f) Increasing the reliance placed on grants from the European Regional Development Fund Yes/No (g) The introduction of a system of grants to small business in assisted areas Yes/No

One of the reasons suggested for the continued differences in prosperity between regions in the UK is

The setting up of a new computer network to provide more detailed national information at job centres on vacancies is an example of a supply- side policy.

Which of the following policies would not tend to increase competition?

Reducing the level of government expenditure, while at the same time adopting a tight monetary policy to reduce inflation, proved to be difficult. Which of the following helps to explain why this was so?