UPSC Prelims 1998 · General Studies
Question 20: Economy and Social Development
The supply-side economics lays greater emphasis on the point of view of the
AnswerThe answer is (a).
Supply-side economics holds that growth comes from raising the economy's capacity to produce, so policy should favour the producer: lower taxes on incomes and profits, less regulation, and encouragement to saving and investment, so that output and employment rise. The Laffer curve and the tax cuts of the Reagan years are its best-known associations. Demand-side (Keynesian) thinking looks instead to the consumer's spending.
Why each option is right or wrong
- (a) Right: it stresses incentives and capacity of the producer.
- (b) The global economy is not the focus of the theory.
- (c) Consumer demand is the focus of Keynesian demand management.
- (d) The middle-man is not a point of view in this theory.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 1998, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.