3.3 Supply Side Policy Flashcards
What are supply-side policies
What happens when deregulating or privatising the public sector
What are subsidies
What is meant by competition policy
What are benefits of infrastructure development
What are research and development incentives
How can the government impact education and training
What are the impacts on reforming tax and benefits, or reducing marginal tax rates
What are the impacts of improving labour market flexibility
Strengths of supply-side policies
The only policy which can deal with structural unemployment because labour market can be directly improved with education and training
Can help increase productivity with increased spending on education and training which results in a more competitive country
Help make the economy attractive to investors
Economy could be made more competitive through deregulation and privatisation which puts average costs lower for firms
Weaknesses of supply-side policies
Not as good as demand-side policies at dealing with cyclical unemployment since they can’t reduce NOG and shift AD right
Significant time lags
Reducing the rate of tax could lead to a more unequal distribution of wealth
Education and training may be highly costly to implement
