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Which of the following assertions would not be consistent with supply side economics?

Lower taxation increases national income by reducing disincentives to work and invest
High interest rates may reduce investment expenditure and so harm national income growth
Increasing aggregate demand will not affect national income or the price level
Aggregate supply creates its own demand

Answer(s): C

All of the following are elements of a supply side policy except which one?

Answer(s): B

Which of the following statements about supply-side economics is correct?

Supply-side policies are part of aggregate demand management policies.
Fiscal policy cannot be used as a part of supply-side policy
Supply-side economists always reject the use of policy to expand demand
Supply-side policies are used to improve the economy's efficiency and competitiveness

Answer(s): D

A 'supply-side' economist would recommend that in the long term, a country's unemployment problem should be tackled by

Answer(s): B

The business sector will be affected by a contraction in the money supply because

Interest rates will tend to fall, thus reducing business costs.
Inflation will fall and thus demand in the economy will expand.
Consumer credit will contract thus reducing consumer demand.
The exchange rate will fall thus making business more internationally competitive.

Answer(s): C

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