WJEC A Level Economics
WJEC A Level Economics Supply Side Policies Exam Questions
Free WJEC A Level Economics revision for Supply Side Policies: what you need to know, common mistakes and exam-style questions with answers. Covers definition of supply side policies, fiscal supply side measures, market flexibility measures, trend growth, LRAS shifts, productivity and efficiency.
Practise Supply Side Policies with past papers
Once you have learnt this topic, find the Supply Side Policies questions in real WJEC A Level Economics past papers and mark them with the mark scheme. Doing lots of real questions is the quickest way to learn how examiners ask about each idea.
About WJEC A Level Economics Supply Side Policies
Supply side policies are AS content in WJEC Economics, with an A2 extension on productivity and efficiency. You need to define supply side policies and explain how they aim to increase trend growth by shifting LRAS and the PPF and by improving the flexibility of product and factor markets. The specification separates fiscal supply side measures, such as incentives to work and invest and spending on infrastructure, from market flexibility measures, such as deregulation and labour market reform. You must evaluate effectiveness and side effects using AD/AS analysis and PPFs. At A2 you analyse more deeply how these policies raise productivity and efficiency. They provide solutions across many A2 Unit 4 essays.
What you need to know
- Definition Supply side policies are government measures that aim to increase the productive capacity of the economy and the efficiency of markets, shifting LRAS to the right and raising trend growth.
- Fiscal supply side measures Lower income tax to strengthen work incentives, lower corporation tax and investment allowances to encourage investment, and government spending on infrastructure, education, training and research.
- Market flexibility measures Deregulation, reducing trade union power, reforming benefits to encourage work, privatisation and competition policy, and improving occupational and geographical mobility of labour.
- Effects shown with AD/AS and PPFs A rightward LRAS shift raises real output and lowers inflationary pressure; an outward PPF shift shows higher potential output. Some measures, such as infrastructure spending, also raise AD in the short run.
- Productivity and efficiency (A2) Raising output per worker through better skills, capital and technology lowers unit costs, improves competitiveness and allows higher wages without inflation.
- Evaluation Supply side policies have long time lags, can be costly, may widen inequality or reduce job security, and their outcomes are uncertain. They work best alongside sufficient aggregate demand.
Common mistakes in Supply Side Policies
- Showing supply side policies as an AD shift only. The intended effect is a rightward LRAS shift.
- Ignoring the difference between fiscal and market flexibility measures. WJEC separates these, so classify your examples.
- Overstating speed of impact. Education and infrastructure projects may take years to raise productivity.
- Forgetting side effects. Benefit cuts can increase poverty; deregulation can lead to market failure.
Try three Supply Side Policies exam-style questions
1. Define supply side policies. (2 marks)
Show the mark scheme answer
Government policies designed to increase the productive capacity (potential output) of the economy; by improving the quantity, quality or efficiency of factors of production and markets (shifting LRAS right).
2. Using a PPF diagram, explain how increased spending on apprenticeships could affect the economy. (4 marks)
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Apprenticeships raise skills and labour productivity; this increases the economy's productive potential; the PPF shifts outwards; correct diagram with labelled axes; effect occurs with a time lag.
3. Evaluate the effectiveness of market flexibility measures in improving UK economic performance. (15 marks)
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A strong answer would analyse how deregulation, weaker union power and benefit reform increase labour market flexibility, lower the natural rate of unemployment and raise competitiveness; evaluate job insecurity, low pay, inequality, reduced training by employers and limited effect on productivity; compare with fiscal supply side measures such as infrastructure investment; reach a judgement.
Supply Side Policies FAQs
What does WJEC A Level Economics Supply Side Policies cover?
It covers what supply side policies are, fiscal supply side measures and market flexibility measures, how they raise trend growth and LRAS, and at A2 how they improve productivity and efficiency.
Which unit is Supply Side Policies examined in?
The AS parts are examined in AS Units 1 and 2, and the A2 parts in A2 Units 3 and 4. Unit 4 assesses all A level content.
Which examples of supply side policy should I learn?
Learn a few of each type: tax incentives and infrastructure or education spending as fiscal measures, and deregulation, benefit reform and labour mobility schemes as market flexibility measures.
