Supply Side Policies

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  • SUPPLY SIDE POLICIES (polices that improve productive potential/capacity of an economy
    • Privatisation
      • This involves selling state owned assets to the private sector.
      • It is argued that the private sector is more efficient in running business because they have a profit motive to reduce costs and develop better services.
    • Deregulation
      • Involves reducing barriers to entry to make markets more competitive.
    • Reducing Income taxes
      • Lower taxes could increase the incentive to work as workers receive a higher proportion of their wage, leading to larger output.
    • Increased Education and Training
      • Better education and training can improve labour productivity and increase AS.
    • Reducing power of Trade Unions
      • Increase efficiency of firms - less time posts to strikes
      • Reduce unemployment - labour markets are competitive
    • Reducing State Welfare Benefits
      • Encourage unemployed to take jobs
    • Providing Better Information
      • May help to reduce frictional unemployment
    • Deregulate Financial Markets
      • Allow more competition and lower borrowing costs
    • Lower Tariff Barriers
      • Makes international trade easier (increases trade)
    • Removing Unneccsary Red Tape
      • Keeps firms costs down
    • Improving Transport & Infrastructure
      • Helps firms reduce costs if they can efficiently transport goods
    • DeregulateLabour Markets
      • Helps increase competitiveness - ease of hiring and firing workers


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