Supply-Side Policies Flashcards
What are supply-side policies
Policies aimed at making markets and industries operate more efficiently and contribute to a faster underlying-rate of growth of RNO
What do successful supply-side policies do
Shift the LRAS curve to the right
What do most governments believe about supply-side policies
That it is key to achieving sustained growth without causing a rise in inflation
Who can implement supply-side policies
Both the public and the private sector
Supply side objectives
-improve incentives to look for work
-increase mobility of labour
-increase investment
Etc
Key supply-side challenges for the UK economy
- low trend growth rate of real GDP
- low capital investment and research
- inequality
- productivity gap
- youth unemployment
What are the 4 aims of the UK government to help the economy grow
- create the most competitive tax system in the G20
- make the UK the best place in Europe for businesses
- encourage investment and exports
- create a more educated workforce
Market based supply-side policies
-cut GS and borrowing
-lower business taxes
-privatisation of state assets
-opening up an economy to inward labour migration
Etc.
What is privatisation of state assets
Selling off public sector businesses into the private sector
Interventionist policies examples
-stronger regulation of industries
-fair minimum wage / living wage
-tax incentives and welfare reforms
Etc.
What are the two main approaches to the supply side
Product markets
Or
Labour markets
Product market supply side policies
They aim to increase competition and efficiency
Examples of privatisation
British Gas
British Airways
What is the aim of privatisation
To break-up state monopolies and create more competition
Other than privatisation how has the government intervened
Through the creation of utility regulators such as OFCOM and OFWAT who have imposed price controls and make it more competitive within markets such as gas and electricity supply and telecommunications
