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ASAL Economics Lang Worksheet 47.1 Answers

The document discusses supply-side policies, distinguishing between market-based and interventionist approaches. It evaluates various strategies such as education and training, subsidies, and privatization, highlighting their potential benefits and drawbacks. The analysis emphasizes the importance of considering the broader economic context and potential negative consequences of these policies.

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43 views2 pages

ASAL Economics Lang Worksheet 47.1 Answers

The document discusses supply-side policies, distinguishing between market-based and interventionist approaches. It evaluates various strategies such as education and training, subsidies, and privatization, highlighting their potential benefits and drawbacks. The analysis emphasizes the importance of considering the broader economic context and potential negative consequences of these policies.

Uploaded by

Cyubahiro Joshua
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CAMBRIDGE INTERNATIONAL AS & A LEVEL ECONOMICS

Language worksheet 47.1 answers


Supply-side policies
1 a policies that increase the role of market forces
b policies that increase the role of the government in the economy

2 Market based Interventionist

Lower corporation tax Education and training

Cuts in unemployment benefits Infrastructure projects

privatisation Subsidies

Deregulation Research & Development support

Reducing trade union power

Reducing minimum wage

3 a Education and training can improve the quality of resources. Making workers more
productive
will result in producing more. It also lowers unit costs and so prices can be reduced.
Evaluation:
Quality of education may be poor and the productivity may not increase by much.
People may gain skills that are not required in the economy.

b Providing subsidies to domestic firms will lower the costs of production. As a result,
the domestic price will be more competitive relative to foreign firms.
Evaluation:
It depends on the prices abroad. If foreign-produced products are still cheaper or
better quality we will still import more and export less. This is also a very expensive
policy.
c Reducing unemployment benefits and income tax rates both act as an incentive to
work.
More people will be willing to work because (1) net income will rise or (2) the
opportunity cost of not working has increased.
Evaluation:
It depends on the changes in tax rate and/or benefits. Both policies will worsen
income inequality. Reducing income tax is regressive. Reducing unemployment
benefits may push people into poverty.

1
Cambridge International AS & A Level Economics – Vlachonikolis, Collins & Croft © Cambridge University Press 2021
CAMBRIDGE INTERNATIONAL AS & A LEVEL ECONOMICS

d Privatisation should lead to increased competition in markets because it creates a


profit motive
where there was none. This leads to efficiency gains in the market and lower unit
costs. It will
also attract foreign investment. When more suppliers enter the market, the supply
curve shifts
right and prices fall.
Evaluation:
Privatisation can lead to job losses as private firms seek to cut costs. The profit
motive can lead to reduced quality of products as well as a fall in social welfare if a
private monopoly is formed.

2
Cambridge International AS & A Level Economics – Vlachonikolis, Collins & Croft © Cambridge University Press 2021

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