Practise selecting supply-side measures to raise productivity and capacity, drawing LRAS effects and evaluating impacts on growth, prices, employment, incentives and equity.
A government cuts income tax.
Why might this be seen as an example of a supply-side policy?
Real incomes are increased.
The costs of businesses are reduced.
The opportunity cost of unemployment has increased.
The standard of living has improved.
The government undertakes a policy of financing training and retraining for unemployed workers.
Which terms are most likely be used to classify this policy?
demand-side
supply-side
fiscal
monetary
yes
no
yes
no
yes
no
no
yes
no
yes
no
yes
no
yes
yes
no
The diagrams show a country's aggregate demand and aggregate supply curves.
Since the world economic downturn (2007-2008), some governments have reduced labour costs
and ensured interest rates remained unchanged.
How would this most likely be shown on a diagram?
A
Option A shown in diagram
B
Option B shown in diagram
C
Option C shown in diagram
D
Option D shown in diagram