macro supply side policies

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4 Terms

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supply-side policies

designed to increase LRAS

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what are supply-side policies good for?

  1. long-run growth

  2. structural and frictional unemployment, increasing labour force participation

  3. helps reduce inflation in the long run

  4. improves international competitiveness

3
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interventionist policies

designed to increase LRAS by moving markets away from equilibrium through government intervention

e.g. increase minimum wage, spending on healthcare and education, spending on infrastructure, subsidising R+D

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free market policies

designed to increase LRAS by allowing free markets to operate more freely

e.g. deregulation, decrease minimum wage, privatisation, lower welfare payments, decrease income/corporation tax

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