4.6.2 Types of Supply-Side Policies

• What are supply-side policies designed to increase in an economy?

  Aggregate supply
• Aggregate supply refers to the total quantity of goods and services an economy produces
• Lowering or abolishing the minimum wage is a labor market reform to make labor more accessible
• Limiting trade union powers is a labor market reform to increase flexibility.


  True
• Enhancing the capital stock is crucial for increasing an economy's productive capacity
• What is the definition of capital stock?

  Physical assets used in production
• Tax incentives encourage businesses to invest in new capital equipment.

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

  Increase aggregate supply
• Supply-side policies aim to reduce unemployment.


  True
• What is an example of a tax cut supply-side policy?

  Lower corporate tax rates
• Government investment in broadband networks is an example of infrastructure improvement.

  True
• Limiting trade union powers reduces their ability to negotiate higher wages
• Order the following policies that enhance capital stock and investment:

  1️⃣ Tax Incentives

  2️⃣ Infrastructure Investment

  3️⃣ Deregulation

  4️⃣ Stable Macroeconomic Environment
• A stable macroeconomic environment includes maintaining low inflation
• What does the term "capital stock" refer to in economics?

  Physical assets
• Reducing corporate tax rates is an example of a policy known as tax incentives
• What is the purpose of government infrastructure investment in supply-side policies?

  Improve productivity
• What are the primary goals of policies aimed at enhancing capital stock and investment?

  Higher aggregate supply
• Providing tax credits for research and development (R&D) is an example of a policy called R&D incentives
• What is the purpose of funding STEM education in supply-side policies?

  Build skilled workforce
• Deregulation and flexible policies create an environment conducive to the adoption of new technologies.


  True
• Match the education and skills development policies with their descriptions:

  Increased investment in education ↔️ More funding for schools

  Promotion of STEM education ↔️ Prioritizing technical skills

  Lifelong learning ↔️ Programs for continuous skill upgrades
• What is the primary goal of transportation infrastructure improvements?

  Facilitate movement of goods
• Investing in broadband networks is an example of improving digital infrastructure
• Supply-side policies are government measures aimed at increasing aggregate supply.

  True
• Categorize supply-side policies into main types.

  1️⃣ Tax Cuts

  2️⃣ Labor Market Reforms

  3️⃣ Infrastructure Improvements
• Match the type of supply-side policy with its definition.

  Tax Cuts ↔️ Reduction in taxes to boost spending

  Labor Market Reforms ↔️ Changes to increase labor flexibility

  Infrastructure Improvements ↔️ Investments in public facilities
• What does capital stock refer to in an economy?

  Physical assets
• Match the policy to enhance capital stock with its description.

  Tax Incentives ↔️ Encourage investment through tax reductions

  Infrastructure Investment ↔️ Government spending on public facilities

  Deregulation ↔️ Reducing bureaucratic red tape

  Stable Macroeconomic Environment ↔️ Maintaining low inflation and stable policies
• Enhancing the capital stock is crucial for increasing an economy's productive capacity
• Match the policy with its description:

  Tax Incentives ↔️ Reduce corporate tax rates

  Infrastructure Investment ↔️ Government spending on roads

  Deregulation ↔️ Easing regulations on investment

  Stable Macroeconomic Environment ↔️ Maintaining low inflation
• Aggregate supply refers to the total quantity of goods and services
• Categorize the three main types of supply-side policies:

  1️⃣ Tax Cuts

  2️⃣ Labor Market Reforms

  3️⃣ Infrastructure Improvements
• Labor market reforms may include abolishing the minimum wage
• What is the goal of reducing the minimum wage in labor market reforms?

  Make labor cheaper
• Relaxing employment regulations gives employers more flexibility in hiring and firing.


  True
• What is the purpose of infrastructure investment as a capital stock enhancement policy?

  Improve overall productivity
• Enhancing capital stock leads to higher levels of aggregate supply.


  True
• Enhancing capital stock is crucial for increasing an economy's productive capacity.

  True
• Maintaining a stable macroeconomic environment is essential for encouraging long-term investment decisions.


  True