Supply side policy

Question 1

Define supply side policy and detail how it is done

Answer 1

Supply side policy: idea is policies are designed to shift aggregate supply curve to the right
How this is done - Increase the quantity of productivity fo the factors of production

Question 2

Define demand side policy

Answer 2

Policy designed to affect aggregate demand: fiscal policy and monetary policy

Question 3

What are two types of supply side policy

Answer 3

Market orientated

Interventionalist

Question 4

Define market orientated policy style

Answer 4

Policies to increase aggregate supply by freeing up the market or make it easier for firms to operate

Question 5

Define interventionalist policy style

Answer 5

Policies to increase aggregate supply by government intervention to counteract deficiencies of the market

Question 6

What are the aims of the labour market with supply side policy

Answer 6

Labour productivity
Labour mobility and reducing unemployment - having people working in different sectors
Labour market flexibility - making it easier for people to move jobs or making it easier for companies to move around labour

Question 7

What are investment aims after supply side policy

Answer 7

Increasing capital stock
Increasing capitals productivity
Human capital - amount of labour

Question 8

What are some examples of market orientated supply side policies

Answer 8

Reducing government expenditure - Government has less of a role in the economy. 
Tax cuts  
Reduce power of labour  
Reduce welfare   
Policies to encourage competition

Question 9

What effect do tax cuts have on the labour market

Answer 9

Tax cuts reduces power of labour and reduces welfare

By reducing the power of labour you reduce the stickiness of equilibrium wage rate

Question 10

Give some examples of interventionalist policy - (government intervention into supply market)

Answer 10

Nationalisation - taking over companies
Direct provision  
Rationalisation    
Information and advice
Assistance to (small) firms

Question 11

Give some examples and explain them for selective intervention into supply market

Answer 11

Research and development - science foundation ireland. Would put ireland strong in this field
Training schemes
Regional and urban policy - Idea that government is choosing certain parts of economy to intervene and try to assist in delivering better business services