Theme 4 - Supply-side policies

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  • Created by: becky.65
  • Created on: 06-03-18 11:58
What are supply-side useful for?
Long term economic growth
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What are supply-side policies designed to do?
Increase productive capacity and use resources more efficiently to raise productivity levels and grow AS
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What are some market-based policies that can increase AS?
Cutting taxes and reducing benefits to create an incentive to work, reducing trade barriers, de-regulating, reducing employment protection, reducing trade union power, increasing training, using private sector funds
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What are some interventionist policies that can increase AS?
Using tax credits, implementing competition policy, regulating business practices, increased training in colleges, increasing public expenditure
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How do successful supply-side policies affect the AS curve?
It shifts it to the right, without inflation becoming a problem
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What are the strengths of supply-side policies?
They promote competition, which cuts prices and increases efficiency, tax credits create an incentive to work which expands the workforce, reducing trade barriers open up new markets and provide cheap consumer goods
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What are the weaknesses of supply-side policies?
Competition laws may not be enforced as strongly as it could be, tax credits has allowed employers to offer very low pay which can be costly for the government, flexible working practices may not help those who need work full-time
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What is the potential trade-offs of austerity?
Cutting government expenditure mean some expensive supply-side policies are less well funded which can have a negative effect in the long run
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What are the potential trade-offs of paying off a deficit?
Higher taxes and reduced spending lead to slower growth and more unemployment, which reduces tax revenue. This makes it harder to pay off the deficit and the recession lasts longer
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What are the potential trade-offs of reducing benefits?
It may create poverty and social problems
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What are the potential trade-offs of flexible labour markets?
It can allow businesses to make more people redundant
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What are the potential trade-offs of deregulation?
It may lead to worse working conditions in some companies
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Other cards in this set

Card 2

Front

What are supply-side policies designed to do?

Back

Increase productive capacity and use resources more efficiently to raise productivity levels and grow AS

Card 3

Front

What are some market-based policies that can increase AS?

Back

Preview of the front of card 3

Card 4

Front

What are some interventionist policies that can increase AS?

Back

Preview of the front of card 4

Card 5

Front

How do successful supply-side policies affect the AS curve?

Back

Preview of the front of card 5
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