Supply Side Policy Flashcards
1
Q
Outline the aim of supply side policies
A
To increase the long term productive capacity of the economy (shift the AS curve out)
2
Q
Define a policy
A
The actions taken by the government
3
Q
When does improvement occur?
A
When the AS curve shifts right
4
Q
Give some examples of free market policies
A
- abolishing minimum wage
- privatisation & deregulation
- reducing trade union power
- cutting unemployment benefits
5
Q
How does reducing trade union power help improve AS?
A
It allows firms to hire and fire more easily and charge more competitive rates
6
Q
Give some examples of interventionist supply side policies
A
- reducing taxation
- subsidies and tax incentives to promote investment
- infrastructure and improvements
7
Q
What are the main areas of supply side policy?
A
- changes to the labour market
- tax and welfare reform
- education and training
- incentives & technology
8
Q
What are the main goals of supply side policy?
A
- long term growth
- improving competition
- increasing labour market flexibility
- to increase international competitiveness
- to increase incentives to work
9
Q
What do supply side policies mainly help to improve?
A
Reduction in the natural rate of unemployment
