3.5 - supply side policies Flashcards
Supply side policies
Aims to influence LRAS
Aims to improve econ growth, employment, inflation, CCAC
Types of SSPs
Interventionalist (Keynesian)
Free Market (classical)
Interventionalist SSP
Training + education
Improve infrastructure
Free market SSP
Improving efficiency + competitiveness by freeing up market forces
Privatisation
Selling state owned assets to the private sector
Eval of privatisation
Improved efficiency (S)
Possibility of natural monopolies (W)
Deregulation
Removal of legislation in a particular market making it more competitive
Evaluation of deregulation
Greater comp - increased choice / lower price (S)
Natural monopolies - forces smaller firms to leave (W)
Subsidies
Government support offered to producers
Lower costs of production
Eval of subsidies
Lower prices due to lower costs (S)
Gov would need to raise tax to afford (W)
Competition policy
Ways gov regulate market / monopolies
Aims to restrict monopolies
Reduce barriers to maintain comp
Eval of comp policy
Keeps prices low for consumers (S)
Decline in innovation (W)
SSP improvement
Shifts LRAS right if in
Infrastructure
Education
Training
R+D
Reforms in tax system + benefits
Lower taxes + lower benefits = more workers
Higher taxes + higher benefits = less workers
Labour Market Flexibility
How easy it is for workers to change jobs / find new types of jobs
Easier for firms to hire / fire