4.5

Supply-side policy

8 flashcards to master Supply-side policy

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Definition Flip

Define 'supply-side policy' and provide an example.

Answer Flip

Supply-side policies are government attempts to increase the productive capacity of the economy. An example is government investment in education and training programs to improve the skills of the workforce.

Key Concept Flip

Explain how improved education and training can impact the aggregate supply curve.

Answer Flip

Increased education and training boost labour productivity and efficiency. This leads to a greater quantity of goods and services produced at each price level, shifting the aggregate supply curve to the right.

Definition Flip

What is meant by 'deregulation' as a supply-side policy?

Answer Flip

Deregulation involves reducing or removing government regulations in an industry. This can lower business costs, encourage competition, and increase output, shifting the AS curve to the right.

Key Concept Flip

How does privatisation aim to improve economic performance?

Answer Flip

Privatisation transfers ownership of state-owned enterprises to the private sector. It introduces profit incentives, encourages efficiency, and can lead to greater investment and innovation, expanding AS.

Definition Flip

Define 'labour market flexibility' and give an example of how to achieve it.

Answer Flip

Labour market flexibility refers to the ease with which labour can be hired, fired, and wages adjusted. Reducing the power of trade unions is one way to increase labour market flexibility.

Key Concept Flip

Explain how tax incentives can be used as a supply-side policy.

Answer Flip

Tax incentives, such as lower corporation tax rates, can encourage investment and entrepreneurship. This leads to increased production capacity and a rightward shift of the aggregate supply curve.

Key Concept Flip

Discuss one potential drawback of supply-side policies.

Answer Flip

Many supply-side policies take a long time to implement and show results.

Example: improving education and training requires significant investment and may only impact productivity in the long run.
Key Concept Flip

Explain how reducing unemployment benefits could act as a supply side policy.

Answer Flip

Reducing unemployment benefits incentivizes people to actively seek employment, increasing the available labour force. This leads to greater potential output and a rightward shift of the AS curve.

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4.4 Monetary policy 4.6 Economic growth

Key Questions: Supply-side policy

Define 'supply-side policy' and provide an example.

Supply-side policies are government attempts to increase the productive capacity of the economy. An example is government investment in education and training programs to improve the skills of the workforce.

What is meant by 'deregulation' as a supply-side policy?

Deregulation involves reducing or removing government regulations in an industry. This can lower business costs, encourage competition, and increase output, shifting the AS curve to the right.

Define 'labour market flexibility' and give an example of how to achieve it.

Labour market flexibility refers to the ease with which labour can be hired, fired, and wages adjusted. Reducing the power of trade unions is one way to increase labour market flexibility.

About Supply-side policy (4.5)

These 8 flashcards cover everything you need to know about Supply-side policy for your Cambridge IGCSE Economics (0455) exam. Each card is designed based on the official syllabus requirements.

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