which of the following policies is a supply-side policy course hero

Which of the following is an example of supply-side policy?

For example, privatisation, deregulation, lower income tax rates, and reduced power of trade unions. Interventionist supply-side policies involve government intervention to overcome market failure. For example, higher government spending on transport and communication.

What are the benefits of supply side policies?

Benefits of Supply-Side Policies. Supply-side policies will increase the sustainable rate of economic growth by increasing LRAS; this enables a higher rate of economic growth without causing inflation. 4. Improved trade and Balance of Payments. By making firms more productive and competitive, they will be able to export more.

What are the limitations of supply-side policies?

Limitations of supply-side policies 1 Productivity growth depends largely on private enterprise and trends in technological innovation. ... 2 Supply-side policies can be counter-productive. ... 3 In a recession, supply-side policies cannot tackle the fundamental problem which is lack of aggregate demand. 4 Time. ...

What is the difference between supply side and free market policies?

Supply-side policies are government attempts to increase productivity and shift aggregate supply (AS) to the right. Free-market supply-side policies involve policies to increase competitiveness and competition.

What is supply side policy?

Supply-side policies are government attempts to increase productivity and increase efficiency in the economy. If successful, they will shift aggregate supply (AS) to the right and enable higher economic growth in the long-run.

How many types of supply side policies are there?

There are two main types of supply-side policies.

How does supply side policy affect economic growth?

Improved economic growth. Supply-side policies will increase the sustainable rate of economic growth by increasing LRAS; this enables a higher rate of economic growth without causing inflation. 4. Improved trade and Balance of Payments. By making firms more productive and competitive, they will be able to export more.

What is the fundamental problem of supply side policies in a recession?

In a recession, supply-side policies cannot tackle the fundamental problem which is lack of aggregate demand.

Why should deregulation be allowed?

For example, building societies were allowed to become for profit-making banks. Deregulation should allow more competition and, in theory, lead to lower borrowing costs for consumers and firms.

How do planning restrictions affect firms?

Planning restrictions can make it difficult for firms to expand and invest in new capacity. Reducing red tape and levels of bureaucracy reduce firms’ costs and encourage an environment conducive to encouraging investment.

What are interventionist supply side policies?

Interventionist supply-side policies. 1. Increased education and training. Better education can improve labour productivity and increase AS. Often there is under-provision of education in a free market, leading to market failure.