MP SSP

Question 1

deflationary MP

Answer 1

• higher IR on loans and savings

- tightening of creator supply

Question 2

reflationary MP

Answer 2

• low IR ~ spending power

- cheaper currency increases exports

Question 3

supply side policies

Answer 3

policies that improve potential/capacity of an economy

focus on improving structural long term performance

Question 4

approaches to supply side reforms

Answer 4

market led policies:
- designed time make markets work better and give private sector more freedom

state intervention:
- in markets to overcome different types of market failure

time lags can be long

Question 5

challenges of SS for the UK economy

Answer 5

• persistent productivity gap
• low capital investment and research
• high rates of youth unemployment

Question 6

main objectives of SSP

Answer 6

• incentives to work and invest
• encourage start ups and expansions of firms
• good labour mobility to help reduce rate of unemployment ~ move for a job

Question 7

if SSP work

Answer 7

• sustained improvement in possible trade off between inflation and unemployment
• raise living standards through stronger long term EG
• reduce unemployment by lowering natural rate of unem ~ less structural & frictional
• improve competitiveness in global markets and achieve between BoP