Supply-side Policies

Question 1

Define Supply-side policies

Answer 1

• Any action taken by government intended to increase the amount that firms are willing to supply

Question 2

Define Interventionist policies

Answer 2

are based on government intervention in the economy intended to directly increase the productive capacity of the economy.

Question 3

Define Market Based policies

Answer 3

are based on institutional changes in the economy intended to develop free, competitive markets that increase efficiency in production, improve the allocation of resources and lead to economic growth (increases in potential output).

Question 4

What are Human Capital policies + examples

Answer 4

The skills, knowledge, and experience possessed by an individual or population
(education, training programs)

Question 5

What are investment in infrastructure policies + examples

Answer 5

The basic physical and organisational structures and facilities needed for the operation of a society or enterprise
(buildings, roads)

Question 6

What are new technology policies + examples

Answer 6

Better technology means more can be produced quicker and more efficiently
(machines)

Question 7

What are industrial policies + examples

Answer 7

• Involve government policies intended to promote specific industries. Policies include: tax reductions, tax exemptions, low-interest loans, subsidies and grants for industries that are held to be important to support growth

Question 8

What does an outward shift of the LRAS curve show

Answer 8

increased productive capacity and reduced inflationary pressure (best for market based supply-side policies)

Question 9

What does AD and LRAS shifting out show

Answer 9

Non- inflationary growth

best for interventionist policies