Supply Source Policies HARRIET BENNETT
- Created by: harriet _-bennett
- Created on: 20-03-15 19:12
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- Supply side policies
- Privatisation
- selling state owned assets to the private sector. private sector is more efficient at running a business as they have a profit motive to reduce costs & develop better services.
- Deregulation
- involves reducing barriers to entry in order to make a market more competitive
- competition leads to lower prices and better quality of goods/ services.
- e.g. BT used to be a monopoly but now telecommunications is quite competitive
- involves reducing barriers to entry in order to make a market more competitive
- Reducing income taxes
- lower taxes increases the incentive for people to work harder, leading to more output.
- However, this isn't always true, lower taxes do not always increase work incentives.
- lower taxes increases the incentive for people to work harder, leading to more output.
- Increased education and training
- Better education can improve labour productivity and increase aggregate supply.
- the under-provision of education in a free market which leads to market failure. So the government needs to subsidies suitable education and training schemes.
- However, government intervention will cost money, requiring higher taxes. it will take time to have effect and the government may subsidies the wrong type of training
- the under-provision of education in a free market which leads to market failure. So the government needs to subsidies suitable education and training schemes.
- Better education can improve labour productivity and increase aggregate supply.
- Reducing the power of Trade Unions
- By increasing efficiency of firms (less time lost to strikes) and reduce unemployment (if labour markets are competitive)
- Reducing State Welfare Benefits
- therefore, encouraging people to take jobs
- Providing better information about jobs
- This may also help reduce frictional unemployment
- Deregulate financial markets
- to allow more completion and lower borrowing costs for consumers & firms
- Lower Tariff barriers
- this will increase trade
- Improving transport and infrastructure
- Due to market failure this is likely to need government intervention to improve transport & reduce congestion.
- Deregulate Labour Markets
- an important objective for the EU to increase competitiveness
- e.g. make it easier to hire and fire workers.
- an important objective for the EU to increase competitiveness
- Privatisation
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