Supply Side

Question 1

Free market supply side policies

Answer 1

Income tax and personal incentives

Reduction is trade union power

Reduction elimination of minim wage legislation

Reduction in unemployment benefits

Reduction in labour protection

Zero hour contracts

Privatisation

Question 2

Interventionist supply side policies

Answer 2

Education

Training

Industrial policy

Research and development subsidies

Question 3

Other supply side policies

Answer 3

Infrastructure

Entrepreneurship

Question 4

Supply side policies and the natural rate of unemployment

Answer 4

Improvements in education should reduce occupation immobility

Incentives to increase training should reduce occupational immobility

Higher investment (especially in infrastructure) should reduce geographical immobility

Lower taxes on incomes should create incentives to work - reducing frictional and voluntary unemployment

Less generous unemployment benefits

Subsidising R&D - create new industries- create more jokes

Question 5

Uk natural rate of unemployment

Answer 5

5%

Question 6

Limitations of supply side policies

Answer 6

Tax cuts often favour those in the too brackets (e.g. Top earners getting cut from 50% to 45%

Cutting benefits is more likely to increase poverty

Reducing the rights of workers may prove unpopular with workers

Time lags as policies may take years to show

Question 7

Supply side policies and improvements

Answer 7

Improvements- these arise out of general increase In productive capacity resulting from businesses acting out of their own interest in improving efficiency and the quantity of their output

Supply side policies-deliberate action taken by the government designed to increase the LRAS of the economy