What differences are there, if any, between fiscal policies, monetary policies and supply side policies?

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [12] There is a distinction between monetary policy and fiscal policy. Monetary policy involves measures to influence economic activity, specifically by manipulating the supplies of money and credit and by altering rates of interest. Fiscal policy influences the economy by the use of taxation and government spending. Supply side policy aims to influence aggregate supply. Supply side policies refer to factors affecting the quantity or quality of goods and services produced. This includes the level of productivity, investment in research, the training of labour. This can be linked to fiscal policy through tax incentives, government subsidies, government spending, or monetary policy through interest rate changes. Provision of information, wage legislation, regulation, deregulation, trade incentives do not overlap as much.
2. L4 for a sound explanation of the analysis and a clear understanding of the three types of policy. 9–12
3. L3 for a competent comment but with more limited explicit explanation of the distinction 7–8
4. L2 for a brief explanation and with no explicit comment on any distinction 5–6
5. L1 for an answer that has some basic correct facts but includes irrelevancies and errors of theory 1–4
6. [13] Fiscal policy can be used through tax changes, direct and indirect, or through government spending – welfare payments, grants. Monetary policy can be used to affect savings and potential future earnings, investment and potential employment. Supply-side policies can be used to encourage training and skills and potential increases in wages, competition an regulation to keep prices lower, minimum wages to encourage people to work.
7. L4 for a reasoned and well-argued discussion with clear explanation of possible income changes and the relevance of each policy group, with a conclusion. 10 maximum if no conclusion. 9–13
8. L3 for a clear but undeveloped discussion of possible influences on income from all three groups of policy, or a fuller discussion of two groups. 7–8
9. L2 For a limited attempt to consider the question but without a balanced approach, limited to one or two groups and with no conclusion. 5–6
10. L1 for an answer that has some basic correct facts but includes irrelevancies and errors of theory 1–4