Supply-Side Policies 2 Flashcards
What is de-regulation or liberalisation
It means the opening up of markets to greater competition
What is the aim of market deregulation
To expand market supply (driving prices down) and increase choice for consumers
Why do most supply-side economists believe competition is good
Because it forces businesses to become more efficient in the way in which they use scarce resources
What does a tougher competition policy regime include
Policies designed to curb anti-competitive practices such as price-fixing cartels and other abuses of a dominant market position
What should trade between nations create
Competition - and a catalyst for improvements in costs and lower prices for consumers
How do supply side policies encourage businesses
Loan guarantees for new businesses
Supply side policies for the Labour Market
Seek to make the British labour market more flexible
Structural weaknesses in the U.K. labour markets
High youth unemployment
Work disincentives
Skills gaps
Trade union reforms
Recent decrease in strike action in every industry due to many of the traditional legal protections of trade unions being taken away
Benefits of improved partnerships between trade unions and employers
Raised productivity and improved flexibility of workers in their jobs
What do the economic returns form extra education spending vary according to what
The stage of development of a country
What does a well-educated workforce act as
A magnet for foreign investment in the economy
Income tax reforms and the incentive to work
Lower income tax improves incentives for people to work longer hours or start a new job.
Help reduce the ‘unemployment trap’
Effects of supply-side improvements
Improved competitiveness
Recent UK government supply-side policies
- privatisation Royal Mail (2013)
- welfare caps
- UK National Infrastructure Plan including HS2
