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21 Cards in this Set
- Front
- Back
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Supply Side Policy |
Government measures designed to increase aggregate supply in the economy |
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Aggregate Supply |
Total amount of goods and services produced in a country at a given price level in a given time period |
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Who is supply side policy friendly with? |
Business Friendly |
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How does supply side policy aim to improve flexibility in labour markets |
By removing restrictions |
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How does ssp restore incentive to work |
By lowering taxes on work and enterprise |
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How does ssp promote competition |
Through privatisation, deregulation and helping small firms |
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How does ssp increase investment |
By improving the flow of capital in capital markets |
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Consumer goods |
Purchased by households |
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Capital Goods |
Purchased by businesses |
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PPF Graph |
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What does ppf show |
The maximum possible output if goods if all resources are used efficiently |
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Impacts of increasing total output |
Impacts standard if living, as there are more jobs therefore lower unemployment therefore more disposable income and increased spending and less chance of demand pull inflation |
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Why focus on supply |
Trigger effect on demand and more employment, etc |
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4 ways to increase supply |
Decrease min wage Subsidies Reduce tax Privatisation |
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How does privatisation increase supple |
Break up of monopolies, that increase competition and quality and reduce prices as firms have to be profitable |
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How does deregulation help supply |
Increase business development, as they reduce barriers to entry such as committees that need to approve decisions |
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How does ssp improve productivity |
Resources are used more effectively, and productive potential of the economy can be increassd |
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How does training and education help supply |
Quality of the workforce improves, which improves labour productivity and aggregate supply. As efficiency improves with new tech there is more investment. Promoted more competition |
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Infrastructure Spending |
Productive potential will increase if quality of the infrastructure is improved. |
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Lowering business taxes to stimulate investment |
Economic growth can be accelerated if business invest more, investment increased if firms are confident about the future |
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Lower income taces |
High taxes on income and profit reduce output and reduce incentive to work |
