supply side policies

Question 1

what are supply side policies

Answer 1

-policies designed to increase productive capacity of the economy, shifting LRAS to the right (increase in q^2CELL or productive efficiency(decreased costs))

Question 2

interventionist supply side policies

Answer 2

-gov spending on infrastructure
-gov spending on education and training
-subsidies to promote investment

Question 3

market based supply side policies

Answer 3

-tax reforms: lower income tax and corporation tax
-labour market reforms: reduce benefits, min wages, tu power
-competition policy: privatisation, deregulation, trade liberalisation

Question 4

cons of supply side policies

Answer 4

-no guarantee of success
-cost
-time lags
-output gap
-need for targeted supply side policies