Supply Side Policies: Labor Market and Financial Market Strategies

The video lecture covers supply side policies, focusing on labour and financial markets. It discusses the objectives of these policies, including incentivizing employment and managing taxes. The lecture also explores unemployment and poverty traps, highlighting the challenges in balancing benefits and taxes. Financial market policies are examined, emphasizing the importance of capital availability and investment incentives. The lecture concludes with a discussion on the role of savings in expanding long-run aggregate supply.

What is the primary goal of supply side policies?

• To reduce government spending

• To enhance long-run aggregate supply

• To control inflation

• To increase short-term demand

Which of the following is a key concern in labor market policies?

• Reducing consumer spending

• Enhancing import tariffs

• Balancing worker rights and firm flexibility

• Increasing corporate taxes

What is the impact of high direct taxes on work incentives?

• They encourage more work

• They have no impact

• They can disincentivize work

• They increase government revenue

What is a key challenge in balancing employment rights?

• Reducing government intervention

• Providing unlimited rights to workers

• Ensuring firms have complete freedom

• Balancing incentives for firms to hire with worker protection

What is an unemployment trap?

• A situation where high taxes discourage work

• A strategy to reduce inflation

• A scenario where benefits are more attractive than working

• A policy that increases employment

How can the poverty trap affect low-paid employees?

• It increases their tax rates

• It makes them eligible for more benefits

• It discourages them from earning more due to benefit withdrawal

• It encourages them to work more hours

What is a potential downside of cutting benefits to address the unemployment trap?

• It reduces tax revenue

• It increases government spending

• It may lead to higher poverty levels

• It discourages foreign investment

What is the role of corporation tax in financial market policies?

• To reduce government revenue

• To encourage business investment in capital

• To increase consumer spending

• To discourage foreign investment

Why is savings important in supply side policies?

• It increases government debt

• It decreases inflation

• It provides capital for investment

• It reduces consumer demand

How can improving the tax treatment of savings benefit the economy?

• By encouraging more savings and investments

• By reducing consumer spending

• By decreasing inflation

• By increasing government debt