Supply Side Policy Flashcards
Supply side policies definition?
policies that seek to improve the long run productive potential of the economy
What will a successful supply side policy do?
shift a countrys production possibility fronteir to the right
What is the purpose of supply side policies ?
- improve incentives to look for work and invest in peoples skills
- increase labour and capital productivity
- increase occupational and geographical mobility
- increase investment and research
- promotes more competition
What are some types of supply side policies?
- deregulation
- privateisation
- cutting income tax
- cutting co-orporation tax
- training and education
- investing grants
What does deregulation do
opening markets to freer competition and removing barriers of entry
What are the impacts of a flexible labour market on productive capacity?
- allow some workers to join labour market increasing supply of labour
What are some free market supply-side policies?
- cutting government spending
- lower business tax
- lower income tax
- improving flexibility of labour force
What are some government intervention supply side policies?
- state investment in public services
- higher minimum wage
- higher taxes on the wealth
What is a supply side policy and govenrment intervention poilicy to increase quantity of labour?
FM - reduce income tax rates
GI- increase gov spending on training schemes for adults
What is a supply side policy and govenrment intervention poilicy to increase quantity and quality of land?
FM - reduce planning restrictions on land usage
GI - provide grants to farmers to spend on fertiliser
What is a supply side policy and govenrment intervention poilicy to increase quantity of capital?
FM - reduce coorporation tax
GI - increase spending on transport infrastructure between regions
What is a supply side policy and govenrment intervention poilicy to increase quantity of enterprise?
FM - deregulate industries to lower entry barriers
GI - provide subsidies to start up businesses
What are some current Uk supply side issues?
- persistant productivity gap
- high rates of youth unemployment
- low trend growth rate of real GDP
- regional economic divide
- low capital investment and research
Reasons for UKs bad productivity?
- low rate of new capital investment
- slowwing rates of innovation
- persistant skills shortages
Give examples of recent Uk supply side policies?
- privatisation of royal mail
- fall in coorporation tax
- apprenticeship schemes
- infrastructure plans (HS2)
