Supplly Side Polocy Flashcards
1
Q
Interventionist supply side policy
A
- Improves quality of factors of production
- Increase quantity of factors of production
- Encourage both the development and use of technology
2
Q
To improve quality of FOP
A
- Subsidies on education and retraining
- Increase in spending on healthcare
- Compulsory education policy
3
Q
Increase in quantity of factors of production
A
- Land reclamation
- Schemes to encourage enterprise
- grant start ups and provision of incubators spaces to test out their ideas - Immigration policies
- expansion of work visas - Improve technology
- by granting more r&d
4
Q
Market based supply side policies
A
- Increase competition in markets to drive efficiency
- Increase the level of competition in factor market
5
Q
To increase efficiency in product market
( increase competition n reduce monopoly)
A
- Reduce barrier of entry
- Reduction in red tape faced when firms apply for business license
- red tapes= official rules and processes that seem unnecessary and delay results - Privatisation
6
Q
To increase efficiency in factor markers
A
- Reducing or abolishing minimum wage
- Weakening of trade unions
- trade unions reduce competitions as they operate by arraigning with employers for welfare of workers
7
Q
Decrease of tax rates to improve incentive to work and invest
A
Reduction in tax rates leaves firms and households with more disposable income to spend and invest.
Thus decreasing the cost of production and increasing LRAS
8
Q
Limitation of supply side policy
A
- Impact on government budget
- Time lags (only show effect in the long run)
- No guarantee of success
- Political acceptability
9
Q
Increase efficiency in factor markets
A
A. Lowering or even abolishing minimum wage
2. Weakening trade unions
- trade unions reduce competition as they operate by bargaining with employers for the welfare of all union members
