supply side policy
- Created by: annie.m13
- Created on: 28-04-18 16:21
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- supply side policy
- any policy that
- improves the economys productive potential
- ways of improving the productivity of factors
- using the tax system
- to provide incentives to stimulate outpu
- reducing direct tax such as income and corporation
- lower income tax encourages the unemployed to get into work
- lower corporation tax encourages entrepreneurs to start up
- promotion of greater competition in labour markets
- drives down wages
- improvements to labour mobility
- better education and training
- local rather than centural pay bargaining
- means that jobs are payed differently in different parts of the country depending on supply
- using the tax system
- improving the performance of firms
- to improve the competition and efficieny
- gov may give grants to firms to assisst then using new technology and innovation
- can also be done through a reduction in tax
- deregulation of a product market
- removes barriers to entry
- makes markets more competitive
- removes barriers to entry
- privitisation
- constant supply of new firms
- small businesses are often innovative and flexible
- effects
- shifts AS right
- evaluation
- advantages
- help reduce inflation in the longterm
- create new/more jobs
- increase in competitiveness
- improve the balance of payments
- less likely to create conflicts between the macroeconomic objectives
- disadvatages
- can take a long time to work
- costly to implement
- may be resisted as they may shift power from groups
- e.g. more competition = less monopoly
- can reduce equity and the distribution of income (at least in the short term)
- lower tax rates/privitisation etc.
- advantages
- any policy that
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