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    Supply Side

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    Supply-side policies are measures designed to increase the potential output of the economy through reforms to product and labor markets. There are two broad approaches - policies focused on product markets aim to increase competition and efficiency through privatization, deregulation, and trade liberalization. Policies focused on labor markets seek to improve flexibility and skills through education spending, union reforms, and tax incentives. Supply-side policies are intended to encourage savings, investment, and growth without fueling inflation, helping achieve the government's objectives of strong, steady growth and low inflation and unemployment.

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    Supply Side

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    Supply-side policies are measures designed to increase the potential output of the economy through reforms to product and labor markets. There are two broad approaches - policies focused on product markets aim to increase competition and efficiency through privatization, deregulation, and trade liberalization. Policies focused on labor markets seek to improve flexibility and skills through education spending, union reforms, and tax incentives. Supply-side policies are intended to encourage savings, investment, and growth without fueling inflation, helping achieve the government's objectives of strong, steady growth and low inflation and unemployment.

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    Supply-side policies are measures designed to increase the potential output of the economy through reforms to product and labor markets. There are two broad approaches - policies focused on product markets aim to increase competition and efficiency through privatization, deregulation, and trade liberalization. Policies focused on labor markets seek to improve flexibility and skills through education spending, union reforms, and tax incentives. Supply-side policies are intended to encourage savings, investment, and growth without fueling inflation, helping achieve the government's objectives of strong, steady growth and low inflation and unemployment.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    55 views10 pages

    Supply Side

    Uploaded by

    api-247036342
    Supply-side policies are measures designed to increase the potential output of the economy through reforms to product and labor markets. There are two broad approaches - policies focused on product markets aim to increase competition and efficiency through privatization, deregulation, and trade liberalization. Policies focused on labor markets seek to improve flexibility and skills through education spending, union reforms, and tax incentives. Supply-side policies are intended to encourage savings, investment, and growth without fueling inflation, helping achieve the government's objectives of strong, steady growth and low inflation and unemployment.

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    © All Rights Reserved
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    Download as ppt, pdf, or txt
    of 10

    SUPPLY-SIDE POLICIES

    By: Filipa and Sam

    WHAT ARE SUPPLY-SIDE


    POLICIES?
    A range of measures designed to
    increase aggregate supply and hence the
    potential output of the economy, though
    many improvements may come from the
    private sector.

    There are two broad approaches to the supplyside:


    Firstly
    policies
    focused
    onproduct
    marketswhere goods and services are produced
    and sold to consumers;
    And secondly thelabour market a factor
    market where labour is bought and sold.

    PRODUCT MARKET REFORMS


    Product marketsrefer to markets in which all
    kinds of goods and services are made and traded,
    for example the market for airline travel; smartphones, new cars; pharmaceutical products and
    the markets for financial services such as banking,
    mortgages and pensions.
    Supply-side policies in product markets
    designed
    toincreasecompetitionandefficiency.

    are

    THE PRODUCT MARKET AND SUPPLYSIDE POLICIES


    Product market reforms:
    Privatisation
    Deregulation
    Toughening up of competition policies
    A commitment to free international trade
    Measures to encourage entrepreneurship and capital
    spending
    Capital investment and innovation

    SAVING, INVESTMENT AND SUPPLY-SIDE


    POLICIES
    Higher tax rates on investment income reduce the return
    from savings. High rates of taxation on income from
    saving and investment thus tend to encourage
    consumption rather than saving. As a result, savings and
    investment tend to fall.
    Tax cuts advocated by supply-side economists are not
    primarily designed to stimulate aggregate demand.
    Instead, they are intended to produce incentives
    encouraging households to save rather than consume,
    and business to invest so that economic growth can
    continue without demand-pull inflation.

    THE LABOUR MARKET AND SUPPLYSIDE POLICIES

    These policies are designed to improve the quality and


    quantity of thesupply of labouravailable to the economy.

    They seek to make the British labour market moreflexibleso


    that it is better able to match the labour force to the
    demands placed upon it by employers in expanding sectors
    thereby reducing the risk of structural unemployment.

    An expansion in the labour supply increases the productive


    potential of an economy.

    LABOUR MARKET REFORMS


    Supply sidelabour market reformsare designed to
    improve the employment prospects for workers of different
    ages, in different occupations and industries and in different
    regions of the country.
    Trade union reforms
    Increased spending on education and training
    Income tax reforms and the incentive to work

    SUPPLY-SIDE POLICIES AND AD/AS MODELS


    Fig.2

    Fig.1

    SUPPLY-SIDE POLICIES AND THE


    GOVERNMENTS MACROECONOMIC
    OBJECTIVES
    The government has four main macroeconomic
    objectives: strong, steady growth, low inflation,
    low unemployment, and balance of payments
    equilibrium on the current account. Supply-side
    policies, when combined with effective policies
    to boost aggregate demand can help to achieve
    these macroeconomic objectives.

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