A government implements a package of supply-side policies designed to upgrade domestic infrastructure and reduce regulatory burdens on businesses. Assuming all other things remain equal, which one of the following statements identifies the most likely effects of these policies on the country's economy?
An increase in the trend rate of economic growth and an improvement in international competitiveness.
An increase in short-run aggregate demand and a rise in cost-push inflation.
A decrease in structural unemployment and an increase in the balance of payments deficit.
A rise in the price level and a reduction in the potential productive capacity.
245 exam-style questions on AQA A Level Economics 2.5 Fiscal policy and supply-side policies, covering 2.5.1 Fiscal policy and 2.5.2 Supply-side policies. Each one has a worked solution and a mark scheme showing where the marks go.