CAIE IGCSE Economics 4.4 Supply Side Policy Topic Practice

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Covered syllabus points

4.4.1—Definition of supply-side policy4.4.2—Supply-side policy measures4.4.3—Effects of supply-side policy measures on government macroeconomic aims

Question 1

[Maximum number: 4]

Some countries engage in dumping by selling their products at less than cost price in Cambodia. The Cambodian Government wants the country to become a high-income economy by 2050. It uses fiscal, monetary and supply-side policies to increase its economic growth rate. Cambodia subsidises some infant industries. The country has one of the world's largest deficits on the current account of its balance of payments (as a percentage of GDP). Some economists suggest cutting taxes would reduce this deficit.

Explain two differences between monetary policy and supply-side policy.

Question 2

[Maximum number: 1]

Which supply-side policy measure would most likely cause the greatest increase in labour productivity in a country?

A

a decrease in the rate of corporation tax

B

a reduced top rate of income tax

C

improved education and training provision

D

privatisation of a state-owned industry

Question 3

[Maximum number: 1]

What does a successful supply-side policy increase in an economy?

A

the level of unemployment

B

the production possibilities

C

the rate of inflation

D

the rate of interest

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