Supply Side Policy Flashcards
What are supply side policies?
Policies to improve the structure and the infrastructure of the economy to improve the productive potential of an economy. They’re undertaken by both the public and private sector. They can be interventionist or market-based.
What are the types of supply side policies?
Infrastructure, R+D, Education and training, Tax reform, Welfare reform, Product market reform, Trade union reform, Labour market reform, Tax incentives, Bureaucracy, Privatisation.
What are the aims of supply side policies?
To increase the productivity of labour and capital input.
To increase business efficiency by promoting more competition within and between markets.
What are the interventionist supply side policies?
Education and training
GS on healthcare
GS on infrastructure
Subsidies/grants/tax credits
What are the cons of supply side policy?
They have to be funded by the public and private sector.
Can increase the budget deficit / national debt - crowding out the private sector.
Has to be the profit incentive for the private sector.
Time lags e.g, HS2
Cost overruns
What are market based supply side policies?
Policies that allow the free market to correct a market failure.
What are the pros of supply side policies?
Increased quantity of factors of production
Increased quality of factors of production
Increased productive efficiency
What are examples of market based supply side policies for tax reform?
Less income tax
Less corporation tax
What are examples of market based supply side policies for labour market reform?
Less benefits
Relax immigration controls
Lower minimum wages
Lower the strength of trade unions
What are examples of market based supply side policies for competition policy?
Privatisation
Deregulation
Trade liberalisation
Anti-monopoly legislation
