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supply side policies MCQs

Practise focused supply side policies questions with marked answers for exam preparation and subject revision.

supply side policies Mcqs
1. According to the Laffer curve, as tax rates increase tax revenue ?
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A. decrease continuously.

B. initially increase and then decrease

C. rise continuously

D. initially decrease and then increase.

2. Which of the following statements supports deregulation of industries ?
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A. Many instances of government regulation have succeeded in reducing competition in industries where competition may be beneficial

B. All of the above

C. Because few real natural monopolies exist, there is rarely a reason for government regulation.

D. Technological change has made it possible for many industries to become more competitive

3. A way of helping depressed regions by having lower wages lower local taxes and lower unemployment benefit has been suggested as ?
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A. market-orientated economists

B. new-Keynesian

C. Keynesian.

D. left-wing theorists

4. New classical economists advocate reducing welfare payments to people who are unemployed or single parents. The economic reasoning used was that this would ?
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A. reduce unemployment

B. reduce poverty

C. help small businesses

D. weaken the power of trade unions

5. Which of the following would be considered a supply-side policy ?
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A. An increase in government spending that would lead to increased aggregate demand

B. An increase in the minimum wage that would cause consumer spending to increase

C. investment tax credits for businesses to encourage investment

D. Restrictions placed on the amount that can be imported.

6. Privatization is the transfer of ?
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A. government businesses to the private sector.

B. corporately owned businesses to individuals

C. privately owned businesses to the government sector

D. publicly held stock to private individuals

7. Reaganomics was a radical shift in policy aimed at directly tackling ?
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A. the underground economy

B. the supply side of the country

C. the charities economy

D. the demand side of the economy

8. Interventionist policies to restore regional imbalance focus on ?
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A. tax concessions for firms that move.

B. improved infrastructure

C. all of the above

D. subsidies to encourage firms that moves

9. A group of economists argue that the real problem with the economy is high rates of taxation and heavy regulation that reduce the incentives to work, save and invest. These economists are?
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A. neo-Keynesian economists

B. Supply-side economics

C. rational-expectations economists.

D. new classical economists.

10. According to supply-side economists, as tax rates are reduced, labor supply should increase. This implies that ?
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A. the substitution effect of a wage change is greater than the income effect of a wage change

B. the income effect of a wage change is greater than the substitution effect of a wage change.

C. there is no substitution effect when tax rates are changed

D. there is no income effect when tax rates are changed

11. According to Supply-side economists. if taxes are cut so that people have an increased incentive to work and businesses have an increased incentive to invest ?
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A. aggregate supply will increase will increase aggregate demand will decrease and the price level will decrease

B. aggregate supply will increase will increase aggregate output will increase and the price level will decrease

C. aggregate supply will increase will increase aggregate output will increase and the price level will increase

D. both aggregate supply and demand will increase will increase and the price level will increase

12. A way helping depressed regions by having wage subsidies lower business taxes and capital subsidies has been suggested as ?
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A. New classical economists.

B. interventionist policies.

C. Left wing theorists

D. monetarists.

13. The success of regional and urban policies has been limited by ?
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A. bad luck

B. poor communications

C. the low level of government grants and by the fact that some projects would have gone ahead anyway

D. bureaucracy