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Lecture notes 4.4.3 Supply Side Policies £7.49
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  2.  
  3. PEARSON (PEARSON)
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  5. Economics B
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  7. Unit 4 - Making markets work

Lecture notes

Lecture notes 4.4.3 Supply Side Policies
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These notes helped me get an A* in A Level Economics, covering all aspects of the specification, plus hints of real world context.

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  • June 15, 2023
  • 2
  • 2022/2023
  • Lecture notes
  • Paddingtion zinzombe
  • All classes

Subjects

  • 411 spectrum of competition 412 barriers to e

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4.4.3 Supply Side Policies

 Aim to improve the long run productive potential of the economy
 Economy can achieve this without government intervention
o Improvements in productivity, innovation & investment

Strength

 Only policy that can deal with structural unemployment
 Labour market can be directly improved with education and training
 Demand side policies are better at dealing with cyclical unemployment

Weaknesses

 Time lags associated with supply side policies
 Market based on supply side polices could lead to unequal distribution of wealth

Distinction between market based & interventionalist policies

 Market based policies limit government intervention allowing free market to eliminate
imbalances
 Forces of supply & demand used
 Interventionalist policies rely on the government intervening in the market

Free market supply side policies

 To increase incentives
o Reduce income & corporation tax to encourage spending
o Could increase long run benefits on economy
o Improves underlying trend of economic growth

Interventionalist supply side policies

 To promote competition
o Deregulation or privatisation of the public sector
o Firms can compete in competitive markets
o Helps economic efficiency
 To reform the labour market
o Reducing NMW allows free markets to allocate wages
o Reducing trade union power makes employing workers less restrictive and increases the
mobility of labour
o Makes labour more efficient
 To improve skills & quality of labour force
o Government spends more on education or subsidies training
o This lower firms costs
o Spending more on healthcare improves the quality of labour force
 To improve infrastructure
o Spend more on roads or schools

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