Supply Side Policies Flashcards
(14 cards)
What are SSP’s
Policies designed to increase the productive capacity of the economy shifting LRAS to the right
What are interventionist SSP’s
Policies that promote more of a role for govt in the economy to shift LRAS
What does govt spending on education, healthcare and training aim to do
Increase the quality of labour shifting LRAS to the right
What are the two main types of govt spending on infrastructure
-transport
-building of schools and hospitals
What does govt spending on transport infrastructure achieve
Decrease the LR cost of production because it’s easier and cheaper to access raw materials and sell goods, allowing for increased investment and job creation
What does building of schools and hospitals achieve
Increases capital stock in economy boosting LRAS
What are market based SSP’s
Policies that aim to reduce the role of the govt in the economy, letting the markets be free
What are the 3 different groups of market based SSP’s
-tax reform
-labour market reform
-competition policy
What does tax reform SSP’s consist of
1)lowering income tax-incentive to come into labour force increase quantity, motivates those already in work increasing quality
2)lowering corporation tax-more retained profits to be used for investment which increases quality & quantity of capital
What does labour market reform SSP’s consist of
1)reduction in benefits-strong incentive for inactive to enter labour force,quantity of labour
2)reduce min wage & trade union power-reducing LR cost of production for businesses and boosting productive efficiency
What does the competition SSP consist of
-privatisation
-deregulation
-trade liberalisation
what is an evaluation for SSP’s
-no guarantee it will work
-cost, risk of wasteful spending
-time lags e.g infrastructure
What are the main aims of SSP’S
-improved incentives to work
-increased labour & capital productivity
-improved occupational and geographical mobility
What are the main Uk supply side weaknesses
-Low R&D spending
-low investment, fell to just 10% of GDP
-skills shortages, 1.3m job vacancies
