CH33 Supply-side policy

Question 1

What are the goals of supply-side policy?

Answer 1

-Used to increase Aggregate supply
-Restoring the incentive to work
-Promote competiton
-Increase investment

Question 1

What is supply-side policy?

Answer 1

increasing the long term productivity, aggregate supply and capacity of the economy.

Question 2

What is aggregate supply?

Answer 2

The total amount of goods and srevices produced in a country at a given price level and time period

Question 3

What are the 3 types of monetary policy?

Answer 3

-Interventionist policy
-Market-based policy
-Labour market policy

Question 4

What are the impacts of supply side policy on productivity?

Answer 4

-It improved the flexibility of labour markets, meaning regulations were enforced on them. This led to less disruption and fewer strikes related to wages.
-It improved training and education which leads to the quality of the workforce increasing

Question 5

What are the impacts of supply side policy on total output?

Answer 5

Increases the productive potential of the economy with increased volumes of output and national income will rise and living standards will be increased. This will push the PPC curve outwards

Question 6

How does privitisation achieve the supply-side goals?

Answer 6

A market based policy that fixes inneficicney and lack of production as in the private sector compedetive pressure is very high and different from the public sector.

Question 7

How does deregulations achieve the supply-side goals?

Answer 7

A market-based policy that removes laws and regulations like unnecessary licenses or excessive paperwork. Which then increases the amount of firms entering the market and raising competition.

Question 8

How do lower incomes taxes achieve the supply side goals?

Answer 8

A labour market policy that reduces income taxes to increase output in the economy, as high taxes might reduce the incentive to work.