3.5 - supply side policies

Question 1

Supply side policies

Answer 1

Aims to influence LRAS
Aims to improve econ growth, employment, inflation, CCAC

Question 2

Types of SSPs

Answer 2

Interventionalist (Keynesian)
Free Market (classical)

Question 3

Interventionalist SSP

Answer 3

Training + education
Improve infrastructure

Question 4

Free market SSP

Answer 4

Improving efficiency + competitiveness by freeing up market forces

Question 5

Privatisation

Answer 5

Selling state owned assets to the private sector

Question 6

Eval of privatisation

Answer 6

Improved efficiency (S)
Possibility of natural monopolies (W)

Question 7

Deregulation

Answer 7

Removal of legislation in a particular market making it more competitive

Question 8

Evaluation of deregulation

Answer 8

Greater comp - increased choice / lower price (S)
Natural monopolies - forces smaller firms to leave (W)

Question 9

Subsidies

Answer 9

Government support offered to producers
Lower costs of production

Question 10

Eval of subsidies

Answer 10

Lower prices due to lower costs (S)
Gov would need to raise tax to afford (W)

Question 11

Competition policy

Answer 11

Ways gov regulate market / monopolies
Aims to restrict monopolies
Reduce barriers to maintain comp

Question 12

Eval of comp policy

Answer 12

Keeps prices low for consumers (S)
Decline in innovation (W)

Question 13

SSP improvement

Answer 13

Shifts LRAS right if in
Infrastructure
Education
Training
R+D

Question 14

Reforms in tax system + benefits

Answer 14

Lower taxes + lower benefits = more workers
Higher taxes + higher benefits = less workers

Question 15

Labour Market Flexibility

Answer 15

How easy it is for workers to change jobs / find new types of jobs
Easier for firms to hire / fire

Question 16

Ways of increasing labour market flexibility

Answer 16

Reduce min wage
Increase training / education
Encourage immigration
Reduce legislation on labour market protection