The government of Slovenia has introduced a range of supply-side policy measures to influence the country's inflation rate. Among other factors affecting the economy is a change in trade union membership and strength.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [1] RPI
2. [1] CPI
3. [1] Improvements in education/training
4. [1] to raise skills/labour productivity
5. [1] Cutting income tax
6. [1] to encourage the reward for working
7. [1] Cutting corporation tax
8. [1] to encourage enterprise/increase investment/lower costs of production
9. [1] Privatisation
10. [1] transferring assets from the public to the private sector/to stimulate competition/improve efficiency
11. [1] Deregulation
12. [1] removing rules and restrictions/increase competition/lower costs of production
13. [1] Subsidies
14. [1] may reduce costs of production/stimulate output
15. [1] A lower inflation rate may increase a country's international competitiveness
16. [1] increase exports
17. [1] reduce imports
18. [1] improve the current account position
19. [1] A lower inflation rate may create greater certainty
20. [1] encourage investment
21. [1] increase economic growth
22. [1] A lower inflation rate may benefit savers
23. [1] create funds for investment
24. [1] A lower inflation rate will reduce the rate at which money loses its purchasing power/value
25. [1] protect living standards
26. [1] make products more affordable
27. [1] helps people on fixed incomes
28. [1] If cost-push inflation, total demand will fall/unemployment rise
29. [1] Lower inflation tends to have larger benefits for the poor than the rich
30. [1] and helps towards reducing inequality
31. [1] There may be hyperinflation
32. [1] which could lead to a breakdown in economic activity
33. [1] Stronger bargaining power with employers
34. [1] may improve working conditions of workers
35. [1] increase health and safety
36. [1] May raise the wages of workers
37. [1] may reduce poverty
38. [1] may increase labour productivity
39. [1] through increasing worker morale/motivation
40. [1] May counterbalance the power of employers
41. [1] protecting the rights of workers
42. [1] May provide worker training
43. [1] increasing skills/productivity
44. [1] May lead to more industrial disputes
45. [1] e.g. strikes/go slows
46. [1] reduce output
47. [1] may discourage investment/discourage MNCs
48. [1] which would damage long run economic growth
49. [1] May cause inflation
50. [1] by raising labour costs
51. [1] make products less internationally competitive
52. [1] increasing a current account deficit/reducing a current account surplus
53. [1] Higher wage costs could reduce profits
54. [1] raise unemployment