43) Supply-Side policies

Question 1

What types of S-side policies exist?

Answer 1

1) Market based
2) Interventionist

Question 2

What are market based S-side policies?

Answer 2

Aim to improve the efficiency of markets by making them fully free markets by removing any barriers that exist

Question 3

What are interventionist S-side policies?

Answer 3

Aim to make free markets more efficient by correcting the market failures they believe exist

Question 4

What are some S-Side policies?

Answer 4

1) Increasing Incentives
2) Promoting competition
3) Reforming the labour market
4) Improving the skills of the labour force
5) Improving infrastructure
6) Encouraging the growth of SMEs

Question 5

How do you increase incentives?

Answer 5

• Reduce income tax
• Reduce welfare benefits
• Remove the poverty trap
• Remove the unemployment trap
• Subsidising workers
• Reduce corporation tax to increase investment
• Increase R&D

Question 6

How do you promote competition?

Answer 6

• Privatisation
• Deregulation
• Strong competition policy
• Encourage business via an industrial policy

Question 7

How do you reform the labour market?

Answer 7

• Increase labour market flexibility (e.g. make hiring and firing easier for firms, improve geographic immobility)
• Reduce power of trade unions
• Promote imigration
• Remove NMW / keep it low

Question 8

How do you improve the skills of the labour force?

Answer 8

• Provide better quality education
• Provide better quality training
• Encourage immigration of skilled / trained workers