Supply side policy

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Question 14
Hard

Many governments adjust their tax regimes as part of supply-side policy to stimulate investment and productivity. Table 2 below provides data on corporation tax rates and private sector capital investment for selected countries in 2023.

Table 2: Corporation tax rates and private sector capital investment as a share of GDP, 2023

CountryHeadline corporation tax rate (%)Private sector capital investment as a % of GDP
Ireland12.528.4
Switzerland14.825.2
United Kingdom25.017.1
Germany29.920.2
Canada26.222.4
South Korea24.229.8
Australia30.021.5

Using Table 2, evaluate to what extent differences in corporation tax rates explain differences in private sector capital investment as a percentage of GDP in selected countries.

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Supply side policy Questions

  1. A Level
  2. /Economics
  3. /Supply side policy