Supply-Side Policies Overview

These flashcards cover key terms and concepts related to supply-side policies in economics, including definitions and implications.

Supply-side policies

Policies aimed at shifting the long-run aggregate supply (LRAS) to increase potential output.

Interventionist supply-side policies

Policies that require government intervention to increase full employment output and correct market failure.

Market-based supply-side policies

Policies that aim to remove obstacles in the free market to improve long-run potential and aggregate supply.

Economic growth

The increase in potential national output leading to a rise in real gross domestic product (rGDP).

Incentives

Factors that motivate individuals or firms to take action, such as reducing tax rates to encourage more work or investment.

Disinflation

A decrease in the rate of inflation, often resulting from increased supply and lower prices.

National Minimum Wage (NMW)

A legally mandated lowest wage that employers must pay; its removal can lower production costs for firms.

Privatisation

The transfer of ownership of public sector enterprises to private individuals or organizations to enhance competition.

Human capital

The skills, knowledge, and experience possessed by an individual viewed in terms of their value to an organization.

Infrastructure development

Investment in facilities and systems that support the economy like transportation, communication, and utilities.