Supply Side Policies Flashcards
1
Q
What are Supply-Side policies
A
Policies that improve the productive potential of an economy
2
Q
Two types of Supply-side policies
A
- Market-led policies
- State / government intervention
3
Q
Examples of interventionist supply-side policies
A
- State investment into public services + critical infrastructure
- a commitment to a minimum/living wage to improve work incentives
- higher taxes on wealth to fund public + merit goods
- Nationalisation + regulation of key industries
4
Q
6 objectives of supply-side policies
A
- Incentives
- enterprise
- technology
- mobility
- flexibility
- efficiency
5
Q
Barriers to R and D
A
- Risk aversion (research expensive)
- Uncertainty about profitability
- Lack of high-skilled workers
6
Q
Examples of Market-led supply-side policies
A
- Lower income tax to improve work incentive + lower business tax
- deregulation (e.g. reducing red tape e.g. beaurcrasy)
- encourage flexibility of labour market (e.g. encouraging part-time work
- Privatisation of state assets
7
Q
Supply-side performance of Uk economy
A
- Low R&D spending (1.7% of GDP)
- Low capital investment (18% of GDP)
- Persistent productivity gap
- Deep regional economic imbalances
