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

mikapolivotti
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mikapolivotti
Created by mikapolivotti over 6 years ago
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Definitions (Purple) Points (Greyish-Purple) Eval (Blue) ** Add diagram showing the effects of relevant gov policies on the price level & output, showing an increase in AS (to the right)

Resource summary

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
    1. Econ Growth: Increase in Real GDP
      1. Evaluation
        1. Time Lag on Education and Training
          1. Will not show s-term benefits; only in the long run
          2. Some educations schemes may not be relavant
            1. i.e. Madonna Studies will be irrelavant to future work opportunities
            2. Other policies such as cutting interest rates may actually be more effective
              1. Conflicts of S-SP
                1. Increased gov. spending & tax can cause disincentives
                2. Depends on the Magnitude of the Change
                  1. If it creates a private monopoly, it will cause a worsening in competition and therefore will not cause economic growth
                  2. Privatization
                    1. Improves Efficiency, more is produced in econ therefore AS also shifts outwards
                      1. Increases Competition therefore AS shifts outwards
                      2. Education & Training
                        1. Quality of Labor Improves, therefore more people are working thus AS shifts out
                          1. More people are in work therefore consumption rises causing AD to shift outwards
                          2. Deregulation
                            1. Allows firms to produce more as there is less restriction by laws thus meaning AS shifts outwards
                              1. Increases competition within firms
                              2. Promotion of Competition
                                1. Increases production, AS Shifts out
                                  1. Less Asymmetric Info therefore consumers have as much knowledge as the producers
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