Supply-side policies

• What is the primary aim of supply-side policies?

  To improve the long run productive potential of the economy
• How can the economy experience supply-side improvements without government intervention?

  Through improvements in productivity, innovation, and investment in the private sector
• What are the aims of supply-side policies?

  • Improve long run productive potential
  • Address structural unemployment
  • Enhance productivity and innovation
  • Increase investment in the economy
• Why are supply-side policies considered effective for structural unemployment?

  Because they can directly improve the labor market through education and training
• Which type of unemployment do demand-side policies better address?

  Cyclical unemployment
• What is a significant drawback of supply-side policies?

  There are significant time lags associated with their implementation
• What is a potential consequence of market-based supply-side policies?

  They could lead to a more unequal distribution of wealth
• What is the distinction between market-based and interventionist supply-side policies?

  • Market-based: Limits government intervention, relies on supply and demand
  • Interventionist: Involves government intervention in the market
• What are the goals of free market supply-side policies?

  • Increase incentives through tax reductions
  • Promote competition by deregulating or privatizing
  • Reform the labor market by reducing NMW and trade union power
• How do free market supply-side policies aim to increase incentives?

  By reducing income and corporation tax to encourage spending and investment
• What is the effect of reducing the National Minimum Wage (NMW) according to free market policies?

  It allows free market forces to allocate wages and increases labor market efficiency
• What are the goals of interventionist supply-side policies?

  • Promote competition through stricter government policies
  • Reform the labor market by improving geographical mobility
  • Improve skills and quality of the labor force through training and education
  • Enhance infrastructure by government spending
• How can interventionist policies improve the geographical mobility of labor?

  By subsidizing the relocation of workers and improving job vacancy information
• What role does government spending on healthcare play in interventionist supply-side policies?

  It helps improve the quality of the labor force and contributes to higher productivity
• What is one way governments can improve infrastructure as part of interventionist supply-side policies?

  By spending more on improving roads and schools
• How do market-based supply-side policies differ from interventionist policies in terms of government involvement?

  Market-based policies limit government intervention, while interventionist policies rely on it