Question 5(b)
[Maximum number: 12]
Low unemployment is a macroeconomic policy objective for a government.
Assess the extent to which this is most likely to be achieved by supply-side policy.
CAIE A-Level Economics 5.4.4 Supply-side Policy in AD and AS
Practise shifting LRAS after supply-side measures, reading output, price and employment effects and evaluating short-run AD pressure against long-run productive gains.
How this is tested
- draw a rightward LRAS shift after stronger productivity or productive capacity
- read the new equilibrium to explain potential output, price-level and employment changes
- evaluate short-run fiscal and AD effects against time-lagged long-run supply gains