Optional20 marks
Case study · UK living standards and supply-side policies
Evaluate the use of market-based supply-side policies to increase UK employment.
Specification point 2.6.3 · Theme 2
Supply-side policies
Macroeconomic objectives and policies · The UK economy – performance and policies
Questions tagged to this specification point
20 questions
Essay questions
Long-form evaluation and discussion
Optional25 marks
ContextIn 2022 the value of UK exports fell by 14% compared with 2020. In contrast, the global average increase in exports was 8.2% over the same time period. The UK’s competitiveness also fell, dropping five places from 18th in 2021 to 23rd in 2022 in the world competitiveness rankings.
Evaluate macroeconomic policies that could be used to increase international competitiveness in the UK’s export markets.
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4.1.9 · International competitiveness2.6.3 · Supply-side policies4.5.4 · Macroeconomic policies in a global context
Optional25 marks
ContextUK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021.
Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.
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2.6.2 · Demand-side policies2.6.3 · Supply-side policies2.1.2 · Inflation4.5.4 · Macroeconomic policies in a global context
Optional25 marks
Case study · The UK economy
Evaluate the likely microeconomic and macroeconomic effects of tax cuts in the UK.
Optional20 marks
Case study · UK investment and productivity
Evaluate the supply-side policies the UK Government could use to increase the UK’s productivity.
Optional25 marks
ContextIn 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%.
Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.
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Optional20 marks
Case study · UK government budget and household consumption
Evaluate supply-side policies that could be used to increase the UK’s rate of economic growth.
Optional25 marks
Case study · Indonesia
Evaluate the likely microeconomic and macroeconomic effects of the supply-side policies recently introduced in Indonesia.
Optional20 marks
Case study · The UK economy
Evaluate government policies, apart from migration policies, that could be used to increase the employment rate in the UK.
Data-response questions
Questions built around exam extracts
15 marks
Case study · The German economy
Discuss supply-side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6).
15 marks
Case study · The UK economy
Discuss supply-side policies the UK government could introduce to stimulate economic growth.
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15 marks
Case study · The Eurozone economy
Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.
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15 marks
Case study · UK economic recovery
Evaluate policies the government could use to increase the UK’s productivity.
Short-answer questions
Focused calculations, explanations and diagrams
3 marks
ContextBetween 2019 and 2020 the UK Government increased its expenditure on healthcare from £175.1 billion to £219.9 billion.
Explain one likely impact of this interventionist supply-side policy on aggregate supply in the UK.
2 marks
ContextThe diagram below shows the aggregate demand (AD) and a possible long-run aggregate supply (LRAS) for the UK. Price LRAS level AD 0 Real output …
Annotate the diagram above to show the likely impact of government policy to promote business competition on the equilibrium level of real output and price level.
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Multiple-choice questions
Quick checks of economic understanding
AS Paper 2, June 2023, Q1(b)Multiple choice
1 mark
ContextBetween 2019 and 2020 the UK Government increased its expenditure on healthcare from £175.1 billion to £219.9 billion.
Which one of the following is also an example of an interventionist supply-side policy?
AA decrease in the level of unemployment benefits
BA decrease in the regulation of product markets
CAn increase in the provision of training programmes
DAn increase in the rate of corporation tax
AS Paper 2, November 2020, Q2(c)Multiple choice
1 mark
Which one of the following is an example of a market-based supply-side policy?
AA reduction in unemployment benefits
BConstruction of new transportation links
CGovernment-funded apprenticeship schemes
DIncreased government spending on healthcare
A-level Paper 2, June 2019, Q4(a)Multiple choice
1 mark
ContextThe UK Government is planning to cut the rate of corporation tax on all pre-tax profits of companies to 17% by 2020.
This would be an example of:
Aa contractionary monetary policy
Ban exchange rate policy
Can expansionary monetary policy
Da supply-side policy
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AS Paper 2, June 2019, Q3(b)Multiple choice
1 mark
ContextUK unemployment rate as a % of all those economically active, seasonally adjusted, from 2008 to 2018 % unemployed …
Which one of the following policies is most likely to reduce the unemployment rate in the UK?
AA decrease in direct taxes on company profits
BA decrease in quantitative easing
CAn increase in government payments to the unemployed
DAn increase in the UK base interest rate
AS Paper 2, June 2019, Q4(c)Multiple choice
1 mark
ContextThe diagram below shows the aggregate demand (AD) and a possible long-run aggregate supply (LRAS) for the UK. Price LRAS level AD 0 Real output …
Which one of the following is an interventionist supply-side policy?
AAn improvement in infrastructure
BAn increase in indirect taxation
CAn increase in interest rates
DAn increase in the regulation of markets
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