Supply-side policy
5.4What the syllabus asks of you
- meaning of supply-side policy, in terms of its effect on LRAS curves
- objectives of supply-side policy: increasing productivity and productive capacity
- tools of supply-side policy, for example training, infrastructure development, support for technological improvement
- AD/AS analysis of the impact of supply-side policy on the equilibrium national income and the level of real output, the price level and employment
Drill this topic
Every question on Supply-side policy, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
27 questions
1May / June 2026 · Paper 11 · Q24Show mark scheme →
Ato shift the short-run aggregate supply (SRAS) curve to the left
Bto shift the short-run aggregate supply (SRAS) curve to the right
Cto shift the long-run aggregate supply (LRAS) curve to the left
Dto shift the long-run aggregate supply (LRAS) curve to the right
Mark scheme
2May / June 2026 · Paper 11 · Q30Show mark scheme →
AAn improvement in the current account of the balance of payments.
BAn increase in inflation.
CAn increase in the budget deficit.
DAn increase in unemployment.
Mark scheme
3May / June 2026 · Paper 12 · Q21Show mark scheme →
Ato bring a country's potential output up to the level of its actual output
Bto ensure a budget surplus
Cto ensure that the composition of output matches the pattern of demand
Dto increase potential output
Mark scheme
4Oct / Nov 2025 · Paper 14 · Q23Show mark scheme →
Aan import quota to restrict the supply of goods
Ba rise in interest rates to encourage the supply of savings
Ca specific tax on the supply of goods to raise revenue
Da subsidy to businesses to promote the supply of training courses
Mark scheme
5May / June 2025 · Paper 11 · Q24Show mark scheme →
Aa reduction in government spending on training
Ban increase in support for technological improvement
Ca reduction in payments to the unemployed
Dan increase in privatisation of industry
Mark scheme
6May / June 2025 · Paper 12 · Q24Show mark scheme →
Aan increase in government subsidy to small firms
Ban increase in the national minimum wage
Can increase in the power of trade unions
Dan increase in the tax on business profits
Mark scheme
7May / June 2025 · Paper 13 · Q24Show mark scheme →
AThey solve the problem of demand deficient unemployment.
BThey do not involve an opportunity cost.
CThey reduce unemployment but do not affect the price level.
DThey may reduce regional unemployment.
Mark scheme
8Feb / March 2025 · Paper 12 · Q21Show mark scheme →
AReal incomes are increased.
BThe costs of businesses are reduced.
CThe opportunity cost of unemployment has increased.
DThe standard of living has improved.
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9Feb / March 2025 · Paper 12 · Q24Show mark scheme →
AAggregate demand will also increase.
BLabour productivity levels will increase.
CWorkers will save any extra wages they earn.
DWorkers will spend any extra wages on imports.
Mark scheme
10Feb / March 2025 · Paper 32 · Q21Show mark scheme →
Agiving subsidies to producers
Bincreasing government spending
Clowering direct taxes
Dlowering interest rates
Mark scheme
11Oct / Nov 2024 · Paper 12 · Q21Show mark scheme →
Aincreased spending on early years education
Bincreased spending on infrastructure
Creduced import barriers
Dsubsidies to exporters
Mark scheme
12Oct / Nov 2024 · Paper 13 · Q21Show mark scheme →
AIncreased government spending supporting technical progress has beneficial long-term supply-side effects but may have short-term inflationary consequences.
BIncreased government expenditure on training increases a country's long-run aggregate supply (LRAS) and also has an expansionary effect on aggregate demand (AD).
CReduced government infrastructure spending reduces an economy's LRAS and has a short-term expansionary effect on AD.
DReduced rates of tax on higher incomes increases an economy's LRAS and has an expansionary effect on AD.
Mark scheme
13May / June 2024 · Paper 13 · Q22Show mark scheme →
Aincreasing government expenditure on infrastructure
Bincreasing research and development expenditure
Cincreasing subsidies for education and training
Dincreasing the supply of money
Mark scheme
14Feb / March 2024 · Paper 12 · Q23Show mark scheme →
Aan increase in government expenditure on training
Ban increase in sales tax
Can increase in the rate of interest
Dan increase of the exchange rate
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15Oct / Nov 2023 · Paper 12 · Q26Show mark scheme →
Aeasing of controls on immigration of workers
Bexpenditure on primary education
Cexpenditure on research and development
Dprivatisation of public utilities
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16Oct / Nov 2023 · Paper 13 · Q27Show mark scheme →
Ademand-side: yes; supply-side: no; fiscal: yes; monetary: no
Bdemand-side: yes; supply-side: no; fiscal: no; monetary: yes
Cdemand-side: no; supply-side: yes; fiscal: no; monetary: yes
Ddemand-side: no; supply-side: yes; fiscal: yes; monetary: no
Mark scheme
17Oct / Nov 2023 · Paper 13 · Q28Show mark scheme →
Abelow full employment; abolition of national minimum wage
Bbelow full employment; extra spending on training
Cfull employment; extra investment in infrastructure
Dfull employment; reduction in the rate of income tax
Mark scheme
18May / June 2023 · Paper 11 · Q27Show mark scheme →
Aa law to reduce the power of trade unions
Ba reduction in the government's fiscal deficit
Can open market sale of securities
Dthe imposition of a tariff on imported goods
Mark scheme
19May / June 2023 · Paper 12 · Q29Show mark scheme →
Aallowing trade unions to maintain work practices irrespective of productivity
Bencouraging workers to work extra hours for extra pay
Cincreasing total labour supply by employing more unskilled workers
Dsupporting the replacement of labour-manned machines by the use of robots
Mark scheme
20May / June 2023 · Paper 31 · Q25Show mark scheme →
Aan imposition of maximum hours in a working week
Ban increase in public sector spending
Cthe provision of new training schemes
Dthe relaxation of import controls on raw materials
Mark scheme
21May / June 2023 · Paper 33 · Q25Show mark scheme →
Aan imposition of maximum hours in a working week
Ban increase in public sector spending
Cthe provision of new training schemes
Dthe relaxation of import controls on raw materials
Mark scheme
22Feb / March 2023 · Paper 12 · Q15Show mark scheme →
Aan increase in laws to promote competition
Ban increase in taxation
Can increase in the budget surplus
Dan increase in the exchange rate
Mark scheme
23Feb / March 2023 · Paper 12 · Q26Show mark scheme →
Aunemployment level high; price level stable
Bunemployment level high; price level rising
Cunemployment level low; price level stable
Dunemployment level low; price level rising
Mark scheme
24Oct / Nov 2022 · Paper 31 · Q30Show mark scheme →
Aadditional spending on subsidies to increase export earnings
Bthe central bank introduces quantitative easing
Clabour market reforms result in increased output per hour worked
Dthe government reduces income tax rates
Mark scheme
25May / June 2022 · Paper 32 · Q21Show mark scheme →
Aan increase in income tax
Ban increase in the birth rate
Can increase in the budget surplus
Dan increase in training
Mark scheme
26Oct / Nov 2021 · Paper 11 · Q19Show mark scheme →
ADiagram A
BDiagram B
CDiagram C
DDiagram D
Mark scheme
27May / June 2021 · Paper 13 · Q28Show mark scheme →
Aeconomic growth / deregulation
Bfull employment / increasing the money supply
Cincome equality / more progressive taxation
Dstable prices / decreasing interest rates
Mark scheme