supply side Flashcards
What is supply side economics
The alternative strategy for improving economic growth is to use supply-side policies. These attempt to increase productivity and efficiency of the economy.
Draw the graph that shows supply side economics
What do supply side economics include
- lower income taxes
-flexible labour market
-better union relationships
-Privatisation and deregulation
What does privatisation and deregulation do
Privatising industries can increase efficiency as private firms have a greater profit incentive to cut costs and boost productivity
what does better union relationships do
prevents frequent strikes which would stop production
what is an example of not having good union relationships
In the 1970s, the UK economy suffered because of poor industrial relations. There were frequent strikes which stopped production.
how could flexible labour markets help boost labour
Highly regulated labour markets, with excessive regulation, may discourage firms from employing workers and setting up in the first place
what are the benefits of having flexible labour markets
More flexible labour markets can thus provide a long-term boost to investment.
what is the trade of of having flexible labour markets
More flexible labour markets could increase job insecurity and lead to harmful effects on labour productivity.
What does lower income tax do
boost the incentive for people to work and work more and longer
Does cutting income tax always work
no because it can be argued that it is exaggerated because it their is a cut from 23% to 22% this will have minimal effect on the incentive to work
