supply side policies Flashcards
why we have supply side policies
Supply-side policies aim to improve the long run productive potential of the economy.
Two main kinds of supply side policies
Market based policy
Interventionist policy
intevetionist policies
market based policies
interventionist policies to improve labour force
gov subsidise on education and training> boosts skills of workforce>improves quality of labour>shift supply right
interventionist policies to improve infastructure
upgraded transport infa eg new airports,improved roads>Long run costs for firms will fall BC easier and cheaper to access to access and sell goods and services>inc prroductive efficieny,shift right
market based policy of tax reform
reduce tax>incentive ppl to join labour force and become ctive>increase amount of labour force
for those IN work >work harder to enjoy extra money>more productive
interventionist policies to reform our labour market
Governments could try and improve the geographical mobility of labour by
subsidising the relocation of workers and improving the availability of job
vacancy information.
market based policy for competition
By deregulating or privatising the public sector, firms can compete in a competitive market, which should also help improve economic efficiency.
disadvantages of using supply side policy
GOOD:
Supply-side policies are the only policies which can deal with structural unemployment, because the labour market can be directly improved with education and training.
BAD:
-There are significant time lags associated with supply-side policies.
-Market-based supply-side policies, such as reducing the rate of tax, could lead to a more unequal distribution of wealth
list of MARKET POLICY SSP
- TAX REFORM
- LABOUR MARKET REFORM
- COMPETITION POLICY
LIST OF interventionist policy
gov spending on education/training
gov spending on infastructure
subsidies to firms to promote investment
