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4 Cards in this Set
- Front
- Back
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What is the aim of supply side policies? |
To increase the economys trend growth rate, therefore to expand productive potential/long run aggregate supply |
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State two supply side policies which work to increase efficiency |
Creating incentives for firms to invest, example offer firms tax breaks
Trade liberalisation, meaning reducing trade barriers.
Encouraging competition, through trade deregulation, privatisation, and providing financial support Reduce income tax Improve education and training Improve labour market flexibility
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What benefits are there from supply side policies? |
Unemployment should fall as the economy grows and output expands Cost push inflation should be reduced, as greater efficiencies are achieved Balance of payments should improve as increased international competitiveness |
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Disadvantages of supply side policies? |
Can take a long time to take effect, so can't be used to fix the economy quickly Unintended consequences; too much deregulation etc result in excessive risk taking Can be unpopular, e.g benefit cuts, and increased labour market flexibility |
