Chapter 20 - Supply-Side Policies

Chapter 20 of the AQA Economics text book (Nelson Thornes)

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  • Created by: Nathan S
  • Created on: 05-04-13 12:25
What is the aim of supply-side policies? (P226)
They aim to affect the determinants of 'AS' in order to shift the 'LRAS' to the right.
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What is the main may that the supply-side of the economy improves? (P226)
Supply-side improvements mainly arise from the private sector, e.g through increased productivity, to stay competitive. The role of governments is, arguably, to promote conditions in which improvements can flourish, e.g. by removing restrictions.
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What are the two broad approaches to improving the economy's supply-side? (P227)
Policies which are aimed at the 'labour market' and 'product markets'.
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What is the aim of labour market supply-side policies? (P227)
They aim to increase the quantity and quality of the workforce. They try to make the labour market more flexible, to try and avoid structural unemployment.
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What are examples of labour market supply-side policies? (P227)
Income tax cuts (increase quantity), Benefit cuts (remove the 'unemployment trap'), Increasing education and training (increasing quality and mobility), and Trade union reforms (increasing quantity (TU's restrict labour in order for higher wages)).
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What is the aim of product market supply-side policies? (P229)
To increase competition and, therefore, efficiency.
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What are examples of product market supply-side policies? (P229)
Privatisation and Deregulation (this replaces public-sector monopolies with competitive private markets), Committing to International trade (increasing competition), Promoting an 'entrepreneurial culture' (small firms will turn into large ones).
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Why does the government not just use supply-side policies? (P232)
Without fiscal and monetary policies, even if the productive capacity of the economy increased, there would not be sufficient demand to make use of the extra potential.
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How do supply-side policies help with the governments objectives? (P233)
Low Inflation; shifting the 'LRAS' right helps to eliminate demand-pull inflation. Low Unemployment; the policy's aim is to increase the quantity of labour employed. Balance of Payments equilibrium; they make UK goods more competitive.
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Card 2

Front

What is the main may that the supply-side of the economy improves? (P226)

Back

Supply-side improvements mainly arise from the private sector, e.g through increased productivity, to stay competitive. The role of governments is, arguably, to promote conditions in which improvements can flourish, e.g. by removing restrictions.

Card 3

Front

What are the two broad approaches to improving the economy's supply-side? (P227)

Back

Preview of the front of card 3

Card 4

Front

What is the aim of labour market supply-side policies? (P227)

Back

Preview of the front of card 4

Card 5

Front

What are examples of labour market supply-side policies? (P227)

Back

Preview of the front of card 5
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Comments

annii k

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hi Nathan, which textbook is this from?

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