3.2.3.3 Supply-side policies

• What are supply-side policies aimed at improving in an economy?

  Productive capacity
• Supply-side policies are designed to reduce unemployment directly.


  True
• What is the primary objective of supply-side policies in terms of economic growth?

  Long-term growth
• Supply-side policies focus on increasing aggregate demand in the economy.

  False
• What is a potential drawback of supply-side policies in terms of time?

  Time lag
• Deregulation can lower production costs for businesses, boosting their competitiveness
• Supply-side policies aim to increase the productive capacity of an economy by improving aggregate supply.
• Match the supply-side policy type with its description:

  Tax Cuts ↔️ Lowering taxes to incentivize work and investment

  Deregulation ↔️ Removing or simplifying regulations

  Education & Training ↔️ Improving skills and knowledge of the workforce

  Privatization ↔️ Transferring state-owned enterprises to private ownership
• Lower inflation is a goal of supply-side policies achieved by reducing inflationary pressures.

  True
• Reducing income tax is an example of a tax cut policy.
• Match the supply-side policy type with its example:

  Tax Cuts ↔️ Reducing income tax rates

  Deregulation ↔️ Reducing red tape for businesses

  Education & Training ↔️ Investing in vocational programs

  Infrastructure Development ↔️ Constructing new roads
• Investments in education and infrastructure can increase productivity, leading to higher economic growth.


  True
• Privatization can be contentious and difficult to implement due to political opposition.


  True
• The effects of supply-side policies often take years to materialize due to a significant time lag.
• Match the supply-side policy type with its real-world example:

  Tax Cuts ↔️ 1980s Reagan Tax Cuts in the US

  Deregulation ↔️ Deregulation of US airline industry in 1978

  Education & Training ↔️ Germany's vocational training system

  Infrastructure Development ↔️ China's investment in high-speed rail
• Germany's vocational training system has enhanced workforce skills and reduced unemployment.

  True
• Supply-side policies aim to lower costs, increase efficiency, and promote long-term economic growth
• One of the main goals of supply-side policies is to boost overall economic growth
• Match the supply-side policy type with its description:

  Tax Cuts ↔️ Lowering taxes to incentivize work

  Deregulation ↔️ Simplifying regulations for businesses

  Education & Training ↔️ Improving workforce skills

  Infrastructure Development ↔️ Building roads and networks

  Privatization ↔️ Transferring state-owned enterprises
• Tax cuts can unintentionally increase income inequality.


  True
• What is the ultimate goal of supply-side policies?

  Long-term economic growth
• Supply-side policies focus on lowering costs and increasing efficiency to promote economic growth.


  True
• Economic growth is a primary goal of supply-side policies, achieved by increasing aggregate supply.
• Order the steps by which supply-side policies improve the economy:

  1️⃣ Improve productive capacity

  2️⃣ Increase output

  3️⃣ Lower costs

  4️⃣ Create job opportunities
• Deregulation aims to reduce red tape for businesses, lowering production costs.


  True
• Supply-side policies aim to boost the productive capacity of the economy by lowering costs and increasing efficiency.
• Implementation challenges are potential drawbacks of supply-side policies.
• Order the steps by which supply-side policies affect inflation:

  1️⃣ Increase aggregate supply

  2️⃣ Reduce inflationary pressures

  3️⃣ Lower overall prices
• Tax cuts may unintentionally benefit the wealthy, leading to increased income inequality.

  True
• The 1980s Reagan Tax Cuts in the US led to a surge in economic activity.
• The privatization of British Telecom improved efficiency and innovation in telecommunications.


  True