Supply-side policies
- 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
- Labour market measures
- Designed to increase AS and shift the LRAS curve to the right
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