Suggested Answers of BT2 Revision Package - ASKnLearn

Limitations of Supply side policiesSupply side policies require huge fiscal commitments from the U.S. government. At a timewhen the U.S. government is facing mounting debts and a budget deficit, its ability to spendfurther will be limited. In addition, supply side policies benefits can only be felt in the longrun, it will not alleviate the stress of cushioning the impact of the loss of income and jobs.Measures to raise productivity and to make U.S. workers more employable might faceresistance from the trade unions and the workers themselves. Workers might not bereceptive to retraining. Trade unions might lose these members to other industries as thesedisplaced workers seek employment in other industries.ConclusionFiscal policy is not the best measure to solve the BOP deficit but it can help in the short termto alleviate the impact of the fall in AD due to the recession as fall as the U.S. fiscal balancecan support. Perhaps a more permanent solution to solving its BOP problem is to identify theroot cause of the problem such as falling competitiveness and inefficiencies in its labourmarket and implement appropriate supply side policies to tackle them. This will boost theexport sector and spearhead the recovery of the U.S. economy.Marking schemeL3Well developed explanation (how the policy works andlimitations) on how fiscal policy and 2 other policies (supply sidepolicy is a must) helped to address the economic problems ofrecession and the rising unemployment rate.9-11L2 Developed explanation on EITHER how fiscal policy OR the 2other policies help to address the economic problem ofrecession and the implementation of other supply side policiesthat rectify the root cause of the quality and competitiveness ofU.S. exports.6-8ORL1Undeveloped explanation on how both fiscal policies and otherpolicies help to address the economic problems of recession &rising unemploymentA smattering of valid points on how fiscal policy and otherpolicies work to solve the problem of recession andunemployment1-5