Market based supply side

What is the main purpose of market-based supply side policies?

• To reduce government revenue

• To increase short-term inflation

• To promote currency depreciation

• To increase long run full employment

What does labour market flexibility refer to?

• Lowering/removing minimum wages and trade union power

• Reducing labour demand through increasing minimum wages

• Increasing minimum wages

What is debt servicing?

• Payments to repay loan principal and interest, which are burdening Ghana in terms of implementing certain supply side policies

• Investing in debt securities which are needed for monetary policy

• Government subsidies for debt

What does privatisation involve?

• Promoting government ownership such that private industries like airlines in Ghana can lower their average costs and be more productively efficient

• Nationalizing industries

• Transfer of ownership from public to private sector although Ethiopian airlines owned by the government has other objectives such as securing employment

What is the impact of currency depreciation on imported goods?

• Decreasing prices despite cost push inflation created

• Increased availability

• Rising prices, especially for capital imports which Subsaharan countries are dependent on

What are different forms of market-based supply side policies?

• deregulation, privatisation, liberalisation, floating

  exchange rate systems, and labour market reforms (such as the removal or national minimum

  wage legislation, and the reduction of trade/labour union power).

• deregulation, infrastructure spending, privatisation, liberalisation, floating

  exchange rate systems, and labour market reforms (such as the removal or national minimum

  wage legislation, and the reduction of trade/labour union power).

• controlling exchange rates through fixed exchange rate, privatisation, liberalisation, floating

  exchange rate systems, and labour market reforms (such as the removal or national minimum

  wage legislation, and the reduction of trade/labour union power).

What is the effect of market-based supply side policies on GDP?

• Increase in long run GDP

• Increase in short run GDP

• Stagnation

What is a potential disadvantage of deregulation?

• Deregulation improves agricultural exports which are very powerful in lowering income inequality

• Tax cuts can disproportionately benefit high-income earners, potentially widening income inequality.

• Tax cuts can disproportionately benefit high-income earners, potentially improving income inequality.

How do labour market reforms impact workers?

• Increase job security

• Strengthen unions

• Reduce employment opportunities, particularly structural unemployment in the long run

• May lead to wage stagnation but improves the allocation of resources in the long run