2.6.3 Supply side policies Flashcards
1
Q
What is a supply side policy?
A
aimed at making industries and markets operate better and efficiently to contribute to GDP growth
2
Q
What is the difference between interventionist and market-based supply side policies?
A
- interventionist involves government intervention to overcome market failure
- market based aims to restore basic function of price mechanism by removing government involvement
3
Q
Give 5 examples of market-based supply side policies
A
- deregulation
- privatisation
- trade liberalisation
- lower income tax rates
- anti-monopoly regulation
4
Q
Give 5 examples of interventionist supply side policies
A
- investment in human captial
- investment in new technology
- investment in infrastructure
- industrial policies e.g., tax cuts
5
Q
Explain why a government may choose to use market-based policies over interventionist policies
A
to reduce disequilibrium and prevent failure
6
Q
Explain why a government may choose to use interventionist over market based policies
A
to prevent market failure
7
Q
Give one benefit of supply side policies over demand side policies
A
supports low inflation
8
Q
Give one disadvantage of supply side policies over demand side policies.
A
time lag
