Ib economics SL supply side policies

all from the glossary

Supply-side policies

Policies aimed at increasing the productive capacity (potential output) of the economy by improving the quality and/or quantity of factors of production.

Market-based supply-side policies

Policies designed to increase efficiency and improve incentives by allowing markets to operate more freely with minimal government intervention.

Interventionist supply-side policies

Policies in which the government plays an active role in stimulating aggregate supply through investment in human capital, infrastructure, and technology.

Investment in human capital

Government or private sector spending on education, training, and healthcare to improve the productivity of the labour force.

Labour market reforms

Market-based policies designed to make labour markets more flexible, such as reducing minimum wages, weakening trade union power, or reducing unemployment benefits.

Product market reforms

Market-based policies aimed at increasing competition by reducing barriers to entry, privatizing state-owned enterprises, and deregulating markets.

Privatization

The transfer of ownership of a firm or industry from the public (government) sector to the private sector.

Deregulation

The removal or reduction of government rules and regulations that constrain economic activity, with the aim of increasing efficiency and competition.

Incentive-related policies

Tax reforms or other measures designed to encourage individuals and firms to work, save, and invest more productively.

Infrastructure investment

Government expenditure on physical capital such as roads, telecommunications, and energy systems to enhance productive capacity.

Research and development (R&D)

Spending on innovation, new technologies, and processes that increase productivity and improve long-term economic growth.

Training programmes

Government or private initiatives that improve workers’ skills and adaptability, reducing structural unemployment and increasing productivity.

Industrial policy

A set of government strategies designed to support particular industries or sectors to improve competitiveness and promote growth.

Investment grants

Payments by the government to firms to encourage investment in new capital, technology, or training.

Reducing income and corporate taxes

A market-based policy that aims to increase incentives for labour participation and investment.

Reducing unemployment benefits

A policy that aims to increase the incentive for unemployed workers to seek and accept jobs.

Reducing trade union power

A measure to make the labour market more flexible by limiting collective bargaining and wage-setting powers of unions.

Long-run aggregate supply (LRAS)

The total quantity of goods and services that producers in an economy are willing and able to supply when resource prices are fully flexible; determined by the quantity and quality of factors of production.

Potential output

The level of output that can be produced when all resources are fully employed; increases with successful supply-side policies.

Supply-side improvements

Enhancements in the productive potential of the economy that result from increased efficiency, innovation, or factor quality.