Suppy Side Policies

Question 1

What are Supply Side Policies?

Answer 1

They are government policies which seek to increase the productivity and efficiency of the economy.

Question 2

What are the two different supply side policies?

Answer 2

• Interventionalist

- Freem market

Question 3

Example of Interventionist supply side policy.

Answer 3

Government spending on education.

Question 4

Give an example of free market supply side policies.

Answer 4

To reduce government legislation.

Question 5

What is the problem with the governments Macro - Economic objectives?

Answer 5

They conflict with each other

Question 6

What policies will clash of there is an expansionary fiscal policy?

Answer 6

Expansionary fiscal policy may contribute to higher economic growth and lower unemployment; however, it will be at the cost of inflation and a deterioration on the current account.

Question 7

What is essential for the government to achieve all these objectives?

Answer 7

To improve the supply side of the economy.

Question 8

If the government improves productivity and pushes Aggregate Supply to the right what will happen?

Answer 8

It can enable low inflationary growth, help improve the general competitiveness of the economy.

Question 9

What are supply side objectives?

Answer 9

Improve incentives for people to look for work
Increase labour and capital productivity
Increase investment in development and research
Promote competition and stimulate a fast pace of innovation

Question 10

Supply side challenges for the uk economy

Answer 10

Persistent productivity gap
High youth unemployment
Deep regional economic divide

Question 11

How has restricting trade union reforms helped supply side policies?

Answer 11

Meant there is a great decrease in strike action

Question 12

How has increased spending on education and training helped supply side policies?

Answer 12

Education improves human capital and efficiency

Economic returns from human capital vary according to stage of development of a country

Question 13

How has income tax reforms and the incentive to work?

Answer 13

Lower rates of income tax provide a short term boost to demand

Question 14

How does Product Market reforms help with supply side policies?

Answer 14

Designed to increase competition and efficiency

• Privatisation
• de-regulation of markets (means opening up markets to greater competition)
• commitment to free trade

Question 15

How does government policies affect economic growth?

Answer 15

Lower taxes on patent taxes to increase innovation

Cooperation tax cut to 20% in 2015

Question 16

What is the objective of government labour market policies?

Answer 16

• Increasing productivity of the labour force

- Increase size of work force

Question 17

Examples of Labour Market Policies?

Answer 17

• Education
• Health Care
• Training for the worker
• Reducing Welfare benefits

Question 18

What is the objective for Government Capital Policies?

Answer 18

Improving efficiency of a market (technology, infrastructure)

Question 19

Examples of government capital policies.

Answer 19

• Subsidies
• Business Parks
• Reducing the Power of Trade Unions (Government legislation has removes the purpose of trade unions, beneficial because Trade Unions reduces the productivity of the worker, because of they are not working they are not producing output)

Question 20

Is privatisation a Labour, Capital or Competition?

Answer 20

Competition

Question 21

What is Privatisation? (Competition)

Answer 21

• Selling public owned assets to the Private Sector
• Private sector is more efficient in running a business because they have a profit motive to reduce costs and develop better services, reduction in costs can be reflected into lower prices.

Question 22

What type of government policy is DEREGULATION?

Answer 22

Competition

Question 23

What is Deregulation? (Competition)

Answer 23

• Reducing barriers to entry in order to make market more competitive
• Monopolistic markets turning into Oligopolies, leads to lower prices & better quality of goods.