Unit 4 ASO3

aggregate supply (AS) policies

Government strategies that make it easier and cheaper for producers to supply goods and services, boosting Australia's productive capacity.

examples of AS policies

Infrastructure, education & training, R&D & subsidies, tax reform, skilled migration, trade liberalisation, environmental policies.

aims of AS policies

Increase quantity & quality of resources, increase productivity, lower production costs, and reduce market failures.

problems AD policies address

Cyclical problems — booms, recessions, demand inflation, cyclical unemployment.

problems AS policies address

Structural problems — cost inflation, skills shortages, poor competitiveness, high natural unemployment, low sustainable growth.

time frame difference between AD and AS policies

AD = short to medium term; AS = longer term (though some can be quicker).

importance of using both AD and AS policies together

So rising demand can be matched by rising supply capacity, allowing non-inflationary growth.

how AD policies work

AD policies work mainly by influencing the level of spending and demand in the economy.

how AS policies work

AS policies work mainly by influencing the conditions for producers, making supply more efficient and expanding productive capacity.

In the short-term, some aggregate supply policies may cause a rise in the level of ______ _________in some industries.

structural unemployment