Supply Side Policies Flashcards
(2 cards)
1
Q
State + explain the macro effects of supply side policies.
A
- Growth: higher
- Unemployment: lower - esp NRU.
- Inflation: lower
- Current Account: improved - as X now more competitive.
- Government Finances: hit to gov finances - link to budget deficit worsening - link to national debt rising (if interventionist SSPs).
2
Q
State + explain the micro effects of supply side policies.
A
- Productivity: SSPs can boost productivity.
- Stakeholder Harm Of Market Based SSPs: market-based SSPs (i.e. deregulation, L market reforms) can harm stakeholders. Deregulation - where are laws being relaxed? Is it with environmental standards? Is it with product safety standards? Labour market reforms - reduction in benefits, abolishing min W, reducing strength of TUs.
- Competition Benefits: of privatisation + deregulation.
- Risk of Monopoly Power: if these policies fail we can see concentrated markets.
- Solve / Result In Market Failures: G on education + training, healthcare, infrastructure - solve key public good / PE market failures. Certain policies can result in market failures - deregulation, risk of monopoly power, privatisation.
