a) Policies

• define supply-side policy

• state the two types of supply-side policy

• policies aimed at increasing LRAS

• interventionist + market-based

• define interventionist policy

• define market-based policy

• the use of government intervention to directly increase LRAS

• the reduction of government intervention to liberate the free market and increase market efficiency

• state the aims of supply-side policy

• state how each aim increases LRAS

• create employment incentives

  • increases the quantity of labour

• reform the labour market

  • increases the quantity/quality of labour

• promote firm competition

  • increases the quantity of land/quality of capital

• explain how supply-side policy can create employment incentives

• interventionist

  • infrastructure projects

  • apprenticeship schemes/subsidised employment

• market-based

  • reducing direct taxes

  • reducing unemployment benefits

• explain how supply-side policy can reform the labour market

• interventionist

  • government expenditure on education

  • housing for occupational mobility

• market-based

  • reducing minimum wage

  • reducing trade union power (notice period/voter turnout/secondary action)

• explain how supply-side policy can promote firm competition

• interventionist

  • preventing large mergers

  • antimonopoly laws (predatory pricing/tying agreements/exclusive deals)

• market-based

  • trade liberalisation

  • deregulation/privatisation