Ch 18 - Supply Side Policies

better quality of goods

In deregulation, competition tends to lead to lower prices + ________ and services.

Free market

________ SSP: policies which increase competitiveness and ________ efficiency.

Privatisation

________ leads to more efficiency and lower prices.

Competition

________ is important in an increasingly globalised marketplace.

Demand side theory

________: is built in the idea that economic growth is stimulated through demand.

Supply side policies

________ are government attempts to increase productivity and efficiency in the economy.

**Free market SSP**

policies which increase competitiveness and free-market efficiency

**Privatisation**

set state owned assets to private sector, improves incentives

**deregulation**

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allows new firms to enter the market open monopolies to competition

**income tax cuts**

greater incentives to work longer hours

**removing regulations**

reduce power of trade unions, minimum wage and regulations

**free trade agreements**

reduce tariff barriers and obstacle to trade

**reduce welfare benefits**

increase incentive to get a job

**Interventionist SSP**

government intervention to overcome market failure

**tax credit**

could allow firms to not pay taxes from retained profit spent on R+D

**Demand side theory**

is built in the idea that economic growth is stimulated through demand

→ main goal is to continue consumer spending on products → keep the economy afloat

**market based supply policies**

the reduction of household income taxes and corporate taxes will have expansionary fiscal effects

Free market SSP

policies which increase competitiveness and free-market efficiency

Interventionist SSP

government intervention to overcome market failure

Improved economic growth

SSP will increase sustainable rate of economic growth by increasing LRAS, which enables higher rate of economic growth without causing inflation