Text A, Paragraph 1
In response to stagnating growth, Germany is considering various supply-side policies to address its long-term economic challenges. These policies are expected to improve the country’s competitiveness on the global stage.
Define the term supply-side policies as indicated in bold (Text A, Paragraph 1).
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Text C, Paragraph 1
Several European countries, including France, have introduced interventionist policies to address market failures and enhance public infrastructure. These initiatives are part of broader efforts to stimulate long-term economic growth.
Define the term interventionist policies as indicated in bold (Text C, Paragraph 1).
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Text E, Paragraph 1
India is in the process of implementing deregulation across various sectors in hopes of boosting entrepreneurship and foreign investment. Critics, however, are concerned about the potential social impacts of these changes.
Define the term deregulation as indicated in bold (Text E, Paragraph 1).
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Text D, Paragraph 2
China has announced a significant investment in human capital as part of its long-term economic strategy. This initiative aims to improve the skill set of its workforce in response to global economic shifts.
Define the term human capital as indicated in bold (Text D, Paragraph 2).
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Text E, Paragraph 2
Poland is currently considering policies to reduce trade union power as part of its efforts to create a more flexible labour market. This move has been met with opposition from workers' groups.
Describe the impact of reducing trade union power on the labour market as found in (Text E, Paragraph 2).
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Text D, Paragraph 3
The UK government is reviewing proposals to reduce minimum wages to increase employment opportunities for low-skilled workers. However, the potential social implications have sparked intense public debate.
Describe the impact of reducing minimum wages as indicated in bold (Text D, Paragraph 3).
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Text E, Paragraph 3
Mexico’s government has highlighted the main objectives of its new supply-side policies, aimed at addressing long-term economic challenges and promoting sustainable growth.
State two objectives of supply-side policies as found in (Text E, Paragraph 3).
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Extract A, Paragraph 2
The Paraguayan government has announced comprehensive labour market reforms, including restrictions on trade union powers and a freeze on minimum wage increases. The labour minister argues these changes will increase employment flexibility and reduce production costs. Manufacturing firms have welcomed the reforms, though workers' organisations warn about potentially lower wages and reduced job security.
Using a Keynesian AD/AS diagram, explain how labour market reforms in Paraguay might affect long-run macroeconomic equilibrium
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Extract B, Paragraph 2
Rwanda's parliament has approved legislation to privatise several state-owned enterprises and reduce business regulations. The economic development minister suggests these reforms will improve efficiency and attract private investment. Initial targets include the national telecommunications company and three state-owned banks, with promises to ensure competitive market conditions post-privatisation.
Explain the difference between market-based and interventionist supply-side policies, using examples from Rwanda's reforms.
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Extract B, Paragraph 2
Peru has implemented a series of tax reforms, reducing both income tax rates and corporation tax. The finance ministry argues these changes will incentivise work effort and business investment. Early data shows increased business registrations, though government revenue has declined by 8%. Critics argue the reforms mainly benefit higher-income groups while reducing funds available for public services.
Explain how Peru's tax reforms might help achieve the goals of supply-side policies.
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Extract C, Paragraph 2
The Czech Republic has announced a €10 billion infrastructure programme focusing on digital connectivity and transport networks. This interventionist approach includes upgrading railway systems, expanding broadband networks, and modernising ports. The government argues this will enhance productivity and international competitiveness, though some economists prefer market-based alternatives.
Using a Classical AD/AS diagram, explain how infrastructure investment in the Czech Republic might affect its economy in the long-run.
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Extract B, Paragraph 2
Thailand's government has embarked on a major high-speed rail project estimated to take five years to complete. The 250km rail line requires annual spending of 50 billion baht for construction, employing thousands of workers and requiring significant materials from domestic suppliers. While designed to enhance long-term productive capacity, economists note the significant boost to current economic activity through government spending.
Explain how Thailand's infrastructure project might affect both aggregate demand and long-run aggregate supply.
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Extract B, Paragraph 2
Egypt's comprehensive supply-side reforms include both infrastructure projects and labour market deregulation. While new port facilities are under construction, changes to employment protection have led to falling real wages. Economic growth has increased to 4.2%, but income inequality has widened, and union representatives argue that workers are not sharing in the economic gains.
Explain how Egypt's supply-side policies might create conflicts between different macroeconomic objectives.
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Extract A, Paragraph 1
Ecuador's comprehensive education reform programme includes significant investment in technical training and university expansion. While the government projects these measures will boost productivity from 2026 onwards, concerns are growing about their immediate impact. The increased education spending is being funded through reduced welfare payments and higher indirect taxes, leading to protests from low-income groups who argue they are bearing an unfair burden while waiting for the long-term benefits to materialise.
Explain how time lags and equity issues might affect the success of supply-side policies in Ecuador.
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