4.6.3 Effects of Supply-Side Policies

• Tax cuts encourage investment and labor supply.


  True
• What do infrastructure improvements reduce for businesses?

  Production costs
• Arrange the goals of supply-side policies in their logical order:

  1️⃣ Improve productive capacity

  2️⃣ Increase long-run aggregate supply

  3️⃣ Boost economic growth
• How do tax cuts encourage investment and labor supply?

  Increasing post-tax incomes
• Match the policy with its short-term effect:

  Tax cuts ↔️ Increased disposable income

  Education and training ↔️ Improved skills among workers

  Infrastructure improvements ↔️ Higher government spending
• Supply-side policies focus on improving factors of production like labor, capital, and technology.


  True
• How do vocational training programs enhance the workforce?

  Improving skills
• Education and training policies have immediate and significant impacts on aggregate supply.

  False
• Tax cuts can lead to short-term inflation due to increased consumer spending and demand.


  True
• What is a potential drawback of infrastructure improvements in the short term?

  Disruption to existing industries
• What is the immediate effect of tax cuts on consumer demand?

  Increased consumer demand
• Infrastructure improvements increase aggregate demand through government spending
• What is the long-term effect of education and training on the economy?

  Increased human capital
• Higher economic growth is a potential benefit of supply-side policies.


  True
• The benefits of education and training may take time to fully materialize.
• What is a potential cost of supply-side policies that increase disposable income?

  Inflationary pressures
• What type of costs are associated with implementing infrastructure improvements under supply-side policies?

  Short-term costs
• Supply-side policies are designed to enhance the productive capacity of an economy
• Education and training policies aim to enhance the skills and productivity of the workforce
• Tax cuts can lead to short-term inflation due to increased disposable income.


  True
• Supply-side policies aim to shift the long-run aggregate supply curve to the right
• What is the primary aim of supply-side policies?

  Boost long-run aggregate supply
• Supply-side policies lead to higher GDP growth in the long run.


  True
• Implementing supply-side policies, such as infrastructure improvements, can involve significant upfront spending
• What type of inflationary pressures can tax cuts from supply-side policies create?

  Short-term
• What was the focus of Singapore's education reform in the 1980s-1990s?

  Improving workforce skills
• Supply-side policies always have immediate positive effects on the economy.

  False
• What are supply-side policies designed to improve?

  Productive capacity
• Education and training enhance the skills and productivity of the workforce
• Supply-side policies aim to foster long-term economic growth.


  True
• Education and training enhance the skills and productivity of the workforce
• What is the primary goal of supply-side policies?

  Enhance productive capacity
• Arrange the types of supply-side policies in a logical order based on their effects:

  1️⃣ Tax cuts to stimulate investment

  2️⃣ Education to improve workforce skills

  3️⃣ Infrastructure improvements to reduce costs
• Tax cuts can lead to increased disposable income and higher consumer spending
• What is the short-term effect of tax cuts on disposable income?

  Increased disposable income
• Education and training improve workers' skills
• Order the short-term effects of supply-side policies based on their immediate impact:

  1️⃣ Tax cuts increase consumer demand

  2️⃣ Education and training have minor positive effects

  3️⃣ Infrastructure improvements disrupt industries
• Education and training can immediately translate into significant productivity gains.

  False
• Match the supply-side policy with its long-term effect:

  Tax cuts ↔️ Higher investment and labor supply

  Education and training ↔️ Improved workforce skills

  Infrastructure improvements ↔️ Reduced production costs
• Supply-side policies aim to shift the long-run aggregate supply curve to the right