Each question is introduced by stimulus material. In your answer you may refer to this material and/or to other examples that you have studied. In 2019, the government of France proposed a 3% tax on the revenue of large firms that advertise and sell products online. This tax may lead to a redistribution of income. There are concerns that this tax may also lead to a reduction in France's export of services as firms affected may leave France. However, the government hopes that supply-side policy measures will encourage such firms to stay in France. Discuss whether or not supply-side policy measures will encourage firms to operate in an economy.

Economics

IGCSE&ALevel

CAIE

Exam No：0455_w21_qp_21 Year：2021 Question No：2(d)

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4.5.2 supply-side policy measures (Possible supply-side policy measures include education and training, labour market reforms, lower direct taxes, deregulation, improving incentives to work and invest, and privatisation.)

4.5.3 effects of supply-side policy measures on government macroeconomic aims (How supply-side policy measures may enable the government to achieve its macroeconomic aims.

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