Supply-side policy

An economy that has limited resources is encouraged to enhance the quality of its human resources. Which policy would bring about this improvement?

Feb/March 2016

Many developing countries want to stop people living in rural areas from relocating to towns. Companies are offered investment grants if they establish their operations in rural districts. What is this policy meant to accomplish?

Feb/March 2017

Why does placing greater emphasis on education and training result in an increase in national output?

Feb/March 2020

Three policy-measure statements are shown below. Which supply-side policy measures would allow the government to make the distribution of income more equal?

Feb/March 2024

Finland is a high-income country that usually records a larger value of exports than imports. It has a strong commercial banking sector that has expanded its lending in recent years. The country has an ageing population, with over a quarter of people aged above 65. In 2022, Finland’s Government ran a budget deficit, with government spending higher than tax revenue.

Feb/March 2025

Which supply-side policy would raise output in the long-run?

May/June 2015

During recent years, governments have needed to deal with the consequences of a global recession. Which supply-side policy might have been used to encourage economic growth?

May/June 2015

When a government wants to promote economic growth, it may introduce supply-side policies. Which policy is a supply-side policy?

May/June 2016

A government plans to raise skills by providing school leavers aged 16 with free training until they are 18 years old. It suggests funding this through a tax on firms’ profits. Which policies are involved in these proposals?

May/June 2017

Which of these is a supply-side policy?

May/June 2018

In many countries, governments give financial assistance to firms that want to generate electricity using wind turbines. What type of policy measure is this?

May/June 2018

Slovenia’s government has put in place several supply-side policy measures to affect the nation’s inflation rate. Another factor shaping the economy is a shift in trade union membership and influence.

May/June 2018

Moldova has the lowest-income economy in Europe, and many of its citizens live in poverty. The economy is based mainly on agriculture, with many small farms. Its retail outlets are also small. The government has used a variety of policies, including supply-side policy, to improve economic performance. This has largely worked. For example, unemployment has fallen.

May/June 2019

Confidence in the government’s reform agenda produced very rapid growth in India’s stock exchange index during 2017. Businesses welcomed the supply-side policy measures that had been put in place, including government spending on infrastructure projects such as constructing new motorways. Nevertheless, critics argued that the government was giving priority to one government aim at the expense of others.

May/June 2019

Overview of changes in the Nigerian economy Nigeria fact file (2017) Government spending: $19.5bn Tax revenue: $12.9bn Balance of trade in goods: $10.4bn Imports of goods: $32.7bn Nigeria makes a wide mix of products, including delivery vehicles, footwear, machines, maize and office equipment. Even so, its export earnings are still strongly tied to oil. The government is aiming to stimulate a rise in the production and export of other products. To do this, it applies a variety of policy tools, including changes to taxation and government spending, for example by subsidising training for construction workers. If training is effective, job prospects and wages can rise. The government wants to improve Nigeria’s macroeconomic performance and lift living standards. Table 1.1 gives data on living standards in Nigeria and Ethiopia in 2017. Table 1.1 Selected data on living standards in Nigeria and Ethiopia in 2017 Country: Nigeria, GDP per head ($): 5900, Life expectancy at birth (years): 59, Average years spent at school: 9, % of children aged under 5 who are underweight: 31.5 Country: Ethiopia, GDP per head ($): 2200, Life expectancy at birth (years): 63, Average years spent at school: 8, % of children aged under 5 who are underweight: 23.6 Investment in Nigeria has been increasing only gradually. Some firms are put off spending on capital goods because interest rates are relatively high, corporation tax is high and the economy is uncertain. Nigeria’s population is rising rapidly. The birth rate is high and the death rate is falling, although there is net emigration. Nigeria’s population was 191 million in 2017 and is forecast to reach 402 million by 2050. A bigger population will bring both opportunities and problems. It will influence the level of demand in the economy, may damage the environment and will require more food. In 2016, the Nigerian government raised the tariff on imported rice to encourage a rise in its own rice production. Nigeria is Africa’s largest rice producer, but it is also the continent’s biggest importer. In 2018, Nigeria imported almost 50% of the rice it consumed. Nigerian farmers produce less rice for each unit of land used than Asian farmers, and production costs for Nigerian farmers are high.

May/June 2021

A government can use a range of supply-side policy measures to improve economic performance. Which policy measure would not meet one of the government’s macroeconomic aims?

May/June 2022

A government offers retraining to unemployed industrial workers so as to expand employment opportunities. This policy could have harmful consequences for other government macroeconomic objectives. Which term describes this situation?

May/June 2022

A government raises its expenditure on education and training substantially over a number of years. What is the likely impact of this policy on the inflation rate in both the short run and the long run?

May/June 2022

Uganda concentrates on agricultural products and has a relatively small secondary sector. In the 1990s, the Ugandan government privatised most of its firms, including banks and railways. Some economists believed that this privatisation did not succeed, because poverty increased and unemployment stayed high. In more recent years, the Ugandan government has applied supply-side policy measures to reduce unemployment.

May/June 2022

Greater government expenditure creates opportunity costs. This was one of the issues confronting the president of France in 2017. After coming to power, he has concentrated on supply-side policy measures rather than monetary policy. Trade union membership in France has fallen in recent years.

May/June 2022

A government aims to cut air pollution in city centres by offering financial support to bus companies, which lowers their production costs and the fares charged to passengers. Which policy measure type is being described here?

May/June 2023

A country’s government, while the economy is at full employment, raises expenditure on education and training. How does this change the chance of obtaining low inflation in the short run and in the long run?

May/June 2023

The government of country Z announces that it will raise spending on work-place training. What effect is this supply-side policy likely to have?

May/June 2023

What is the most probable impact on an economy of a successful supply-side policy?

May/June 2023

What does the term supply-side policy mean?

May/June 2024

Which of the following statements about supply-side policy is correct?

May/June 2024

An improvement in the transport infrastructure in India has lowered farming costs. What example does this illustrate?

May/June 2025

Which supply-side policy measure is most likely to help a government achieve its goal of full employment?

May/June 2025

If a government wants to promote economic growth, it may use supply-side policies. Which policy counts as a supply-side policy?

May/June 2025

In the diagram, what level of subsidy per kilo would a government need to provide to producers to persuade them to expand production from $20$ kilos per week to $30$ kilos per week?

Oct/Nov 2018

A government wants to cut unemployment by using a supply-side policy measure. Which measure should it adopt?

Oct/Nov 2018

Which of the following statements about supply-side policy is correct?

Oct/Nov 2021

Which supply-side policy measure could be used to align workers’ skills with available job vacancies?

Oct/Nov 2021

Which government policy would raise productivity?

Oct/Nov 2021

Which statement concerning supply-side policies is correct?

Oct/Nov 2021

In 2019, the French government suggested a 3% levy on the revenue of large firms that market and sell goods online. This tax could cause income to be redistributed. There are worries that it could also cut France’s exports of services if the firms affected decide to relocate from France. However, the government expects supply-side policy measures to persuade these firms to remain in France.

Oct/Nov 2021

What would be a likely objective of supply-side policy?

Oct/Nov 2023

Which of the following is not a supply-side policy measure?

Oct/Nov 2023

What does the phrase supply-side policy measure refer to?

Oct/Nov 2023

During 2020, several firms in Suriname, a country in South America, ceased producing. This happened because they were unable to meet their variable costs, and also some of their fixed costs. As the nation’s output fell, its unemployment rate increased. The government applied supply-side policy measures to lower unemployment. In 2021, the number of firms in some markets declined again, although this occurred while output was increasing.

Oct/Nov 2023

What is the most likely outcome of a successful supply-side policy?

Oct/Nov 2024

Which macroeconomic policy is most likely to deliver economic growth and price stability simultaneously?

Oct/Nov 2024

Which government measure would not be classified as part of a supply-side policy?

Oct/Nov 2025

What is increased in an economy by a successful supply-side policy?

Oct/Nov 2025

Which supply-side policy measure would be most likely to lead to the largest rise in labour productivity in a country?

Oct/Nov 2025