Macro 11 - Supply Side Policies

Question 1

What are supply side policies?

Answer 1

Supply side policies are actions by the government intended to increase the amount that firms are willing to supply at any given price level. They aim to shift the AS curve right

Question 2

What do supply side policies aim to acheive?

Answer 2

1- They aim to influence and increase AS
2- They influence a number of microeconomic factors such as worker’s skills and competition in markets
3- They aim to increase an economy’s trend growth rate and expand productive potential

Question 3

What is the ultimate goal of supply side policies?

Answer 3

Help achieve macroeconomic objectives

Question 4

What are market-based supply side policies?

Answer 4

Market based policies are supply-side policies designed to remove the barriers to the efficient working of free markets. They increase the effectiveness of markets and focus on the power of the free market

Question 5

What are interventionist supply side policies?

Answer 5

Interventionist supply side policies are designed to correct market failure

Question 6

What are some examples of market based supply side policies?

Answer 6

• Reducing income and/or corporation tax rates
• Deregulating and/or privatising the public sector
• Reducing or abolishing the national minimum wage
• Reducing trade union power
• Reforming the benefits system to encourage workers to take available jobs
• Encouraging free trade

Question 7

What are some examples of interventionist supply side policies?

Answer 7

• Increased government spending on education and training
• Increased government spending on healthcare
• Increased government spending on infrastructure
• Stricter competition policy
• Policies to reduce the geographical immobility of labour