2.6.3

• What are the distinctions between market-based and interventionist policies?

  • Market-based policies limit government intervention.
  • Interventionist policies rely on government actions.
• What are the goals of market-based supply-side policies?

  • Increase incentives for spending and investment.
  • Promote competition through deregulation.
  • Reform the labor market for efficiency.
• What are the goals of interventionist supply-side policies?

  • Promote competition through stricter policies.
  • Improve labor market mobility.
  • Enhance skills and quality of the labor force.
• What is the effect of a rightward shift in the LRAS curve?

  Increases productive potential of the economy
• What are the strengths and weaknesses of supply-side policies?

  Strengths:

  • Address structural unemployment.
  • Improve labor market directly.

  
  

  Weaknesses:

  • Time lags in effectiveness.
  • Potential for increased inequality.