economic practise

SUPPLY SIDE POLICY ON ECONOMIC GROWTH

supply side policies:

• privatisation

• education and training

• deregulation

• cutting bureaucracy

• promotion of competition

• control of power of monopolies

• reduction in planning restrictions

• improvement in human capital increases the

value of workers’ output, meaning that firms

can produce more for the same price

• improved education increases opportunities

which means that incentives can work more

effectively.

Points might include the following:

• time lag for the education to have a result on

workforce

• education might not be effective, for example

Madonna studies, Surf Science

• expansionary fiscal implications of supply side

policies

• other policies might be more effective, such as

cutting interest rates

• scope for further supply side policies is limited

• time lags, for example supply side policies can

lag for decades

• supply side policy conflicts

- Increased government spending and tax can

cause disincentives

- Supply side policy might have positive impact

on the fiscal side in the long run.

Discuss the fiscal and supply side policies the UK Government could pursue to

reduce the rate of unemployment. Refer to Extract 2 and Figure 3 in your answer.

Definition of macroeconomic objectives as the main aims of the

government to achieve improved economic welfare (for all the

population) (2 marks)

• Definition of Growth as an increase in either real and/or potential output

(GDP) (2 marks)

• Identification of any 2 other macroeconomic objectives that are

adversely affected (2 marks maximum) such as

o Control of inflation (or price stability)

o A fair or equitable distribution of…