Question1

All economists are in favor of policies that move the aggregate supply curve to the right by increasing potential output. Supply side policies such as removing unnecessary regulations, maintaining an efficient legal system and encouraging technological progress are all desirable, although not easy to implement. Some economists believe that cutting taxes will increase aggregate supply. Discuss its relevance to Pacific Island Countries (PICs) as our economy is challenged during the pandemic health crisis at the moment.

Question 2

Recently prices for goods such as vegetables have increased and prices of many more items have increased while employees had their pay cuts, hours short and even had been laid off. Wages and prices are deemed to be flexible but in reality they are sticky in nature.

Discuss.