supply side policy

Question 1

supply side definition

Answer 1

pollicies to increase productivity and increase efficiency in the economyand shiftg LRAS to the right

Question 2

2 types of ssp

Answer 2

interventionist and free market

Question 3

intervention ssp

Answer 3

government intervention to overcome market failure e.g spending on transport, infrastructure, communications

Question 4

free market ssp

Answer 4

to increase competitiveness e.g privatisation, deregulation, lower income tax rates

Question 5

free market policy examples

Answer 5

privatisation, deregulation, flexible labour force, free trade agreements, reduce welfare benefit

Question 6

interventionist policy examples

Answer 6

public sector investment, education, vocational training, increase affordable housing supply, health care spending

Question 7

ssp disadvantages

Answer 7

disproportionaly benefits the wealthy
time lags
productivity growth depends largely on private enterprise and trends in technologoical innovation(dynamic)

Question 8

reasons for poor supply side policy

Answer 8

low spending on R+D
poor infrastructure
skills gaps in the labour market
employment shift to public sector

Question 9

key supply side challenges in the uk

Answer 9

productivty gap
high youth unemployment
low trend growth of gdp
regional economic divide
structural trade deficit

Question 10

(market based) increasing incentives analysis

Answer 10

lower corporation tax incentivises an increase in national output, productive capacy increasing LRAS

lower income taxes increase retained profits, increasing ability to invest, increasing productive capacity and boosting LRAS

Question 11

(market based) increasing competiton by deregulation analysis

Answer 11

reduces barriers to entry, more firms in industries, increasing competition meaning firms lower production costs and prices are more innovative increasing ouput and efficiency

Question 12

(market based) increasing competion through privatisation

Answer 12

priv sector is more efficient bc they have a profit motive to reduce cost and develop better services increasing LRAS

Question 13

(market based) reforming the labour market

Answer 13

reducing the power of trade unions should increase the efficiency of firms e.g. less time lost to striking
lowers ability for workers to have increase in pay, firms can hire more, lowers unemnployment

reducing state welfare benefits encourages the unemployed to find jobs which increases efficency and output, boosting LRAS

Question 14

(interventionist) improving skills and quality of labour force analysis

Answer 14

spending on education improves productivity. govt can subsidise training schemes
spending on health increases life expectancy, people can work longer and human capital increases.increases e+o boosting LRAS

Question 15

(interventionist) improve infrastrtucture

Answer 15

improves mobility of labour and helps reduce frictional unemployment

Question 16

SSP link to economic growth

Answer 16

increasing productivity capacity of firms

Question 17

ssp link to inflation

Answer 17

increasing AS enables AD to continue to increase without increasing the price

Question 18

issue of AD/AS excess capacity

Answer 18

insufficient capacity in the economy wont benefit from an AS incraese
iof AD is below full employment level then increasing AS will not lead to growth

Question 19

2 differences between supply and fiscal

Answer 19

supply- tackles cause of inflation which is effiency of firms
fiscal- only influences AD

Question 20

which type of employment might SSP help

Answer 20

cyclical - if AS increases, the economy grows and there is less cyclical employment
structural- subdised education and training will help get peopl back to work
frictional- investing in infrastructure helps mobility of labour

Question 21

why is privatisation less of an option for the uk in 2016

Answer 21

brexit led to low business confidence