IAI Actuarial Core Principles · Business Economics · Supply-side policies and their impact on businesses
Which of the following is a market-oriented supply-side policy rather than an interventionist one?
Privatisation of a state-owned enterprise is market-oriented because it reduces state involvement and exposes the firm to competition and profit incentives. Government-funded training, infrastructure, R&D subsidies and universities are interventionist supply-side measures, where the state directly provides or finances the resources.
- AGovernment-funded vocational training programmes
- BState investment in a national highway network
- CPrivatisation of a loss-making state-owned enterpriseCorrect
- DSubsidies for research and development in manufacturing
- Public funding of new universities
Explanation
Market-oriented policies seek to improve efficiency by increasing competition and reducing state involvement. Privatisation does this by transferring ownership to private firms. Training, infrastructure, R&D subsidies and public universities are interventionist because the state directly provides or funds them.
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