Question 24
Economic Growth and DevelopmentWhich of the following are supply-side policies used to promote long-run economic growth?
I. Investment in education and training
II. Reducing income tax rates to increase work incentives
III. Increasing government transfer payments to households
IV. Deregulation of product and labour markets
- A.I, II and IV only
- B.I and III only
- C.II, III and IV only
- D.All of the above
Show the answer and explanation
Answer: A (I, II and IV only)
Explanation
Education, lower income taxes and deregulation raise the economy's productive capacity. Transfer payments only redistribute income and affect demand.