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Economics IGCSEPDF 91
118 pagesrevision 46932
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Solved Answers (Note Form)
Unsolved Past Paper Questions
Question 5.1 (4 Marks)
Explain two ways in which supply-side policies
Question 5.2 (6 Marks)
Question 5.3 (8 Marks)
Discuss the potential drawbacks and limitations of using
performance of an economy.
supply-side policies
supply-side policies
●
●
●
Analyse whytheuseof
inflation.
can promote long-term economic growth.
isoften preferred to fiscal policy for reducing
to improve the
● Way 1: Investment in Education and Training:
○ K: Investing in education increases the skills and qualifications of the labour force
(human capital).
○ A: This raises the overall productivity of labour, allowing the economy to
produce more output with the same amount of resources, shifting Aggregate
Supply (AS) outwards.
● Way 2: Infrastructure Spending:
○ K: Spending on roads, rail, and communication networks improves the country's
capital stock.
○ A: This lowers the costs of transport and improves efficiency for all firms, leading
to an increase in the long-run productive capacity (AS).
K: Inflation can be reduced by reducing AD (fiscal policy) or increasing AS (supply-side
policy).
A: Supply-side policies (e.g., deregulation) work by increasing competition and efficiency,
leading to lower production costs for firms.
An: This directly addresses the cost problem and reduces cost-push inflation without
sacrificing output or employment.
Q5.2: Supply-Side vs. Fiscal for Inflation (6 Marks)
Q5.1: Supply-Side and Long-Term Growth (4 Marks)