A Level Economics (9708)•9708/13/M/J/19

Explanation
Expansionary supply-side policies increase productive capacity Steps:
- Define supply-side policy as measures that enhance long-term production potential, like improving infrastructure or skills.
- Identify expansionary aspect: policies that shift aggregate supply curve rightward to boost output without inflation.
- Assess options: check if they target supply factors (e.g., human capital, investment) versus demand (e.g., spending, money supply).
- Choose best fit: government investment in education directly builds workforce skills for sustained growth.
Why C is correct:
- Building schools invests in human capital, increasing labor productivity and aggregate supply per supply-side economics principles.
Why the others are wrong:
- A: Interest rate cut is expansionary monetary policy that stimulates demand, not supply.
- B: Tax cuts primarily boost short-term demand via increased disposable income, not core supply-side capacity.
- D: Currency devaluation enhances export competitiveness, acting as demand-side stimulus.
Final answer: C
Topic: Supply-side policy
Practice more A Level Economics (9708) questions on mMCQ.me