Supply side policies

Question 1

Supply side policies

Answer 1

These are polices used by the government aimed to increase aggregate supply. Supply side policies should increase productivity and shift LRAS to the right

Question 2

Two types of supply side policies

Answer 2

• Market - Based policies
• Interventionist policies

Question 3

Market based polices

Answer 3

These are policies aimed to increase LRAS without much government intervention. These are also known as free market policies.
e.g Privitisation , Deregulation , Tax cuts and icreasing incentives , Labour Market reforms , reducing protectionist policew

Question 4

Interventionist polices

Answer 4

Policies that promote direct government intervention in economic activities to strongly improve LRAS.
* e.g government spending on education and training
* subsidised spending on R+D
* Spending on infastructure and transport
* Improved healthcare

Question 5

Privitisation

Answer 5

the transfer of ownership of firms from the public sector to the private sector of the economy
* maybe due to inefficent opperation under the government
* in the private sector firms are more efficent due to the profit objective

Question 6

Reducing protectionist measures

Answer 6

Decreasing trade barriers on inernational trade

Question 7

Labour market reforms

Answer 7

Labour market reforms aim to make the labour market more efficent
* remove recruitment and redundency restrictions
* reforming trade unions
* decrease unemployment benefits
* easier immigration policies to encourage immigration of skilled workers
* reduce red tape - reduces firms costs