2.6.3 Supply Side Policies

Question 1

What are the two types of Supply Side policies?

Answer 1

Market Based- Desgined to remove anything that prevents the free market system working efficiently/ reduce level of goverement intervention. Removes barriers that make costs higher and lower output like the removal of regulation/ tariffs and introducing privatisation etc.

Interventionist - Policies desgined to correct market failure.

Question 2

What do supply side policies aim to do?

Answer 2

Increase the productive potential
of the economy

Question 3

Some more specific examples of market based policies?

Answer 3

Increase Incentives - Tax cuts or reducing benefits incentivise people to work.
Promote Competition - privatisation or deregulation- let markets work more freely
Reform the Labor Market - educing union power, increasing labor mobility

Question 4

Some more specific examples of Interventionist policies?

Answer 4

• Goverment funding for education to improve workforce skills.
• Goverment funding of infrastrucutre
• Subsidising business to increase R&D