Supply-Side Policies Flashcards
When where supply side policies introduced?
1970s
Who introduced supply-side policies?
Thatcher and Reagen
What do supply side policies do?
Increase aggregate supply
What is supply side economics?
The branch of free market economics arguing that government policy should be used to improve the competivness and efficiency of markets
What are the types of supply side?
Supply side improvements and supply side policies
What are supply side improvements?
Reforms undertaken by the private sector to reduce costs to enable firms to become more productively efficient and competitive
What are supply side policies?
Supply side policies are measures taken by the government that are designed to improve national economic performance by creating competitive and more efficient markets through intervention
How does supply side economics affect economic growth?
Supply side policies achieve long run growth since by definition they increase the productive capacity of the economy
How to increase aggregate supply?
Reduce costs of factors of production
How does supply side economics affect employment?
If labour market policies are used and there is potential for increased employment
How does supply side economics affect inflation?
The biggest advantage of supply side policies is it allows economies to expand without the threat of inflation
How does supply side economics affect current account?
If firms costs fall and their competivness improved then the country current account may improve as exports become more internationally competitive
What are interventionst supply side industrial policies measures?
Regional policy
Competition policy
Industrial relations
Infrastructure
Subsidising RandD
What is regional policy?
Transfering resources from richer to poorer areas
What are the drawbacks on regional policy?
Opportunity cost
Skills mismatch
What is competition policy?
Attempts to prevent and reduce the abuse of monopoly power
What are the drawbacks of competition pricing?
Economies of scale
Innovation
What is industrial relations policies?
Reducing the power of trade unions
What are the negative effects of industrial relations policy?
Demotivated workers
Reduced worker protection
What is infrastructure policy?
Providing infrastructure
What are the negative effects of infrastructure?
Opportunity cost
Time Lag
Technological obsoletion
What is subsiding r and D?
Funding research
What are the drawbacks of funding RandD?
May achieve nothing
Firms may not benefit
Time lag
What are interventionst supply side policies - labour market?
Education and Training
