Evaluate the use of supply-side policies to achieve economic growth

Evaluate the use of supply-side policies to achieve economic growth

1. S-S P are policies meant to influence the movement of AS by increasing the potential/ productive capacity of an economy

2. Econ Growth: Increase in Real GDP

3. Evaluation

   • Time Lag on Education and Training
     • Will not show s-term benefits; only in the long run
   • Some educations schemes may not be relavant
     • i.e. Madonna Studies will be irrelavant to future work opportunities
   • Other policies such as cutting interest rates may actually be more effective
   • Conflicts of S-SP
     • Increased gov. spending & tax can cause disincentives
   • Depends on the Magnitude of the Change
   • If it creates a private monopoly, it will cause a worsening in competition and therefore will not cause economic growth

4. Privatization

   • Improves Efficiency, more is produced in econ therefore AS also shifts outwards
   • Increases Competition therefore AS shifts outwards

5. Education & Training

   • Quality of Labor Improves, therefore more people are working thus AS shifts out
   • More people are in work therefore consumption rises causing AD to shift outwards

6. Deregulation

   • Allows firms to produce more as there is less restriction by laws thus meaning AS shifts outwards
   • Increases competition within firms

7. Promotion of Competition

   • Increases production, AS Shifts out
   • Less Asymmetric Info therefore consumers have as much knowledge as the producers