Supply Side Policies

Question 1

Aggregate supply

Answer 1

Total amount of goods produced in a country at a given pricelevel in a given time period

Question 2

Supply side policies

Answer 2

Gov measures designed to increase aggregate supply in an economy

Question 3

Supply side policy aims

Answer 3

• Improve flexibility in labor markets by removing restrictions
• Restore incentive to work by lowering taxes on work and enterprise
• Promote competition through privatization, deregulation and helping small firms
• Increase investment by improving the flow of capital in capital markets

Question 4

Supply side policies on productivity

Answer 4

• Improve flexibility
• Improve training and education

Question 5

Supply side policies aim to increase productive potential of an economy

Answer 5

• Increase volume of output will increase national income/living standards
• Increased supply means there is a lower chance of demand-pull inflation; more jobs are created