Supply-side policies

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  • Created by: sammilaw
  • Created on: 08-04-15 14:50
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  • Supply-side policies
    • Designed to increase AS and shift the LRAS curve to the right
      • Improved supply-side performance is the key to achieving sustained economic growth without a raise in inflation
      • AD also needs to increase to make the increase in AS worthwhile
    • Private sector improvements to supply i.e. increased training budgets, investment in latest capital equipment
    • Examples of policies:
      • Labour market measures
        • i.e. improvements in education and training, performance related pay schemes and encouraging more flexible pension arrangements
      • Tax reforms
        • i.e. reducing income tax, replacing direct tax with indirect tax
      • Reform of the welfare state
        • i.e. reducing welfare benefits to create an incentive to find work
      • Industrial and competition policy measures
        • i.e. privatisation, deregulation and contracting out
      • Financial and capital measures
        • i.e promoting entrepreneauship

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