5.4 Supply-side policy

a) Explain why expenditure on education and training is a supply-side policy and consider why its impact on the general price level may differ between the short run and the long run. [8]

b) Assess the extent to which supply-side policy is the best method to reduce the rate of inflation. [12]

b) Assess whether supply-side policy is likely to be equally successful in reducing both structural and cyclical unemployment. [12]

b) Assess which expansionary macroeconomic policy would be most likely to enable a government to meet its economic objective of a low rate of unemployment. [12]

b) Assess whether supply-side policy is the most effective way to achieve long-run economic growth. [12]

b) Assess whether supply-side policy is the only way of reducing long-term unemployment in an economy. [12]

b) Assess whether supply-side policies are the most effective way to correct a deficit on the current account of the balance of payments of an economy. [12]

b) Discuss whether supply side policies will be successful in increasing the quantity and quality of the factor enterprise in a modern economy. [12]

b) Discuss the difficulties that might be encountered when adopting supply side policies to expand the productive capacity of an economy and consider whether these difficulties can be overcome. [12]

A government embarks on a supply-side policy involving substantial additional funding for new road schemes and for new training schemes designed to raise labour productivity.

a) Use an AD/AS diagram to explain the effects of this funding on the level of output in the economy. [8]

b) Discuss the extent to which a supply-side policy involving new road schemes and new training schemes will increase the rate of inflation in the economy. [12]

In summer 2018, many countries suffered a water shortage because of a long spell of very dry weather.

b) Consider the short-term and long-term policies that could be adopted to deal with a water shortage in an economy and discuss whether these are likely to be successful. [12]