Gov Policy and Objectives

Question 1

The distinction between market-based and interventionist policies:

Answer 1

Market-based policies limit the intervention of the government and allow the free market to eliminate imbalances. The forces of supply and demand are used.

Question 2

Free market supply-side policies (3)

Answer 2

To increase incentives
To promote competition
To reform the labour market

Question 3

Free market ssp:
To increase incentives

Answer 3

Reducing income and corporation tax to encourage spending and
investment. This could increase the long run productive potential of the
economy, especially if labour and capital becomes more productive.

Question 4

Free market ssp:
To promote competition

Answer 4

By deregulating or privatising the public sector, firms can compete in a
competitive market, which should also help improve economic efficiency.

Question 5

Free market ssp:
To reform the labour market

Answer 5

Reducing the NMW (or abolishing it altogether) will allow free market
forces to allocate wages and the labour market should clears. Reducing
trade union power makes employing workers less restrictive and it
increases the mobility of labour. This makes the labour market more
efficient.

Question 6

Interventionist supply-side policies: (4)

Answer 6

To promote competition
To reform the labour market
To improve skills and quality of the labour force
To improve infrastructure

Question 7

Interventionist supply-side policies:
To promote competition

Answer 7

A stricter government competition policy could help reduce the
monopoly power of some firms and ensure smaller firms can compete,
too.

Question 8

Interventionist supply-side policies:
To reform the labour market

Answer 8

Governments could try and improve the geographical mobility of labour by subsidising the relocation of workers and improving the availability of job vacancy information.

Question 9

Interventionist supply-side policies:
To improve skills and quality of the labour force

Answer 9

The government could subsidise training or spend more on education.
This also lowers costs for firms, since they will have to train fewer
workers.
Spending more on healthcare helps improve the quality of the labour
force, and contributes towards higher productivity.

Question 10

Interventionist supply-side policies:
To improve infrastructure

Answer 10

Governments could spend more on infrastructure, such as improving
roads and schools.