Lesson 2.6.3

2.6.3 Supply-side policies Quiz: Pearson Edexcel Economics, Unit 2

20 questions

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Lesson 2.6.3, Supply-side policies: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 2: Theme 2: The UK economy – performance and policies, written with Revision Ninja.

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The 20 questions

  1. Which policy is an example of a market-based supply-side measure?

    • State education spending
    • Income tax cuts
    • Government infrastructure grants
    • Nationalised health funding

  2. Which shift on an AD/AS diagram is the primary goal of supply-side policies?

    • LRAS to right
    • LRAS to left
    • SRAS to left
    • AD to right

  3. Which policy is an example of an interventionist supply-side measure?

    • State training schemes
    • Deregulation of markets
    • Abolishing minimum wage
    • Lower corporation tax

  4. Which policy aims to increase competition using a market-based approach?

    • Increasing import tariffs
    • Industry deregulation
    • Nationalising private firms
    • Subsidising state monopolies

  5. What is a major advantage of supply-side policies over demand-side policies?

    • Non-inflationary growth
    • Guaranteed quick results
    • Immediate short-run impact
    • Zero financial cost

  6. Which policy directly increases the quality and productivity of human capital?

    • Reducing tariff rates
    • Education and training
    • Cutting interest rates
    • Privatising public utilities

  7. What long-run outcome directly results from a successful supply-side policy?

    • Higher budget surplus
    • Higher demand-pull inflation
    • Higher potential output
    • Lower productive capacity

  8. What is a major drawback of most interventionist supply-side policies?

    • Reduced productive capacity
    • Lower long-run output
    • Long time lags
    • Immediate demand-pull inflation

  9. According to supply-side theory, cutting income tax rates aims to achieve what?

    • Reduced productive capacity
    • Lower labour mobility
    • Higher demand inflation
    • Increased work incentives

  10. What supply-side benefit results from government investment in transport infrastructure?

    • Lower productive capacity
    • Reduced labour mobility
    • Higher import tariffs
    • Reduced business costs

  11. What is the long-run effect of successful infrastructure spending on aggregate supply and output?

    • Higher output
    • Lower output
    • Fixed output
    • Unchanged output

  12. Which market-based policy is specifically designed to increase labour market flexibility?

    • National wage boards
    • Job guarantee schemes
    • Raising minimum wage
    • Reducing trade unions

  13. What potential market failure can occur after deregulating a natural monopoly?

    • Excessive government control
    • Monopoly power abuse
    • Higher income taxes
    • Increased labour rigidity

  14. What supply-side objective is targeted by reducing the legal power of trade unions?

    • Higher structural unemployment
    • Lower wage-push inflation
    • Increased government spending
    • Lower business productivity

  15. Why might supply-side policies fail to reduce structural unemployment in the short run?

    • Inflation drops rapidly
    • Interest rates rise
    • Aggregate demand falls
    • Skills mismatches persist

  16. Which type of supply-side policy involves direct state spending on infrastructure and education?

    • Regulatory
    • Monetary
    • Market-based
    • Interventionist

  17. What happens to the price level if aggregate demand increases faster than long-run aggregate supply?

    • It stays constant
    • It falls
    • It rises
    • It turns negative

  18. What happens to inflationary pressure when long-run aggregate supply increases faster than aggregate demand?

    • It stays constant
    • It increases
    • It decreases
    • It doubles

  19. Which market condition is required for deregulation to successfully increase economic efficiency?

    • Government subsidies
    • High tariffs
    • Monopoly power
    • Effective competition

  20. Which type of unemployment do supply-side policies primarily target?

    • Cyclical unemployment
    • Structural unemployment
    • Seasonal unemployment
    • Frictional unemployment

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