Question

3.1. What is fiscal policy and how is it applied?

3.2. List and explain any six supply side policies.

3.3. What are the benefits of the supply side policies?

Answer 1

3.1.Fiscal policy is the policy in which government influences the country's economy by adjusting the spendings and taxes.

It is applied when an economy need to be curbed. The money gets sucked by applying more taxes and decreasing spendings of the government.This condition prevails when the inflation is too strong.

3.2 supply side policies:-

• Low inflation:-if the economy is efficient then the inflation is low
• Lower unemployment:-more number of companies or more work generation can reduce unemployment issue
• Balance of payments positive phase
• Improved economic growth
• Lowering welfare benefits
• Privitisation
• Deregulation
• Labour market reforms
• Trade liberalisation

3.3 The benefits are as we know higher growth rate ,more employment, reducing cost push inflation,creating wealth,employment etc.