12 Questions
What is the main purpose of incentive-related policies involving adjustments to taxes?
To improve incentives to work, innovate, and invest
How does trade liberalization affect markets?
It increases efficiency in production and lowers prices
What is a major benefit of freely floating exchange rates?
Automatically adjusting to excess demand or supply of a currency
How does opening up countries to free trade impact markets?
It improves the allocation of resources and increases economic growth
What is the role of market-determined exchange rates in international transactions?
To reflect supply and demand forces for a currency
How do larger free markets resulting from trade liberalization impact consumer choice?
Increase consumer choice
What is the main idea behind market-oriented policies?
To rely on free markets and competition for resource allocation
How do market-determined prices help in a market-oriented economy?
By acting as signals and incentives for decision-making
What is the purpose of policies encouraging competition like deregulation and privatisation?
To make markets more competitive and improve resource allocation
How do labour market reforms contribute to market-oriented policies?
By allowing free market forces to improve resource allocation
Which factor is NOT a benefit of policies encouraging competition in a market-oriented economy?
Higher prices for consumers
Why are freely floating exchange rates considered a part of market-oriented policies?
To allow exchange rates to be determined by supply and demand in free markets
Explore the strengths and weaknesses of market-oriented policies such as competition encouragement, labour market reforms, and trade liberalisation. Understand the benefits of market-based supply-side policies and incentive-related measures.
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