Supply-Side Policies Flashcards
Are supply-side policies more macro or micro?
Micro.
What do governments believe the effect of supply-side policies on the economy will be?
Causing sustained growth through improved productivity and therefore output, without causing a rise in inflation.
Why is high youth unemployment a supply-side challenge for the UK economy?
It often stems from issues within the youth, such as lack of skills, education or experience. A rectangular population pyramid means there isnt a lack nor surplus of labourers, so the issue must lie within the workers themselves.
Why is the rise of emerging nations a supply-side challenge for the UK economy?
It intensifies global competition and reduces the UK’s ability to increase it’s own supply and productivity.
They often provide cheaper labour, land and production costs, putting pressure on UK business, especially manufacturing or labour-intensive ones.
Why is a regional economic divide a supply-side challenge for the UK economy?
Uneven distribution of skills limits overall productivity and economic growth by lacking oppurtunities for large sections of the population. Often linked to geographical immobility.
Why is the structural trade deficit a supply-side challenge for the UK economy?
It implies issues with the overall productivity and competetiveness of the economy.
How is low investment and reasearch a supply-side challenge for the UK economy?
Low investment hinders long-term productivity and growth, and makes the UK less competetive globally.
It limits job creation as companies will be unable to expand as rapidly.
How is rising inequality and poverty a supply-side challenge for the UK economy?
More people on benefits can de-incentivise working, or promote a less productive workforce.
Those in poverty can experience barriers to participation in the workforce such as poor health, and lack of education and training.
What are market-based supply-side policies?
Policies designed to make the free market work more efficiently by removing barriers that may stop this from happening (often involves removing government intervention).
What are interventionalist policies?
Policies designed to control market forces to correct market failure and generally involve an increase in government intervention.
What do market-based policies consist of?
Cutting govt spending and borrowing.
Lowering business taxes.
Reducing red-tape.
Deregulation to boost competition.
Privitisation of state assets.
Opening up an economy to overseas trade and investment.
What do interventionist policies consist of?
Tax incentives and welfare reforms.
A commitment to fair minimum wage/ living wage.
Management of the exchange rate.
Nationalisation of key industries.
Stronger regulation of industries.
