Supply side policy

Supply side policy

Supply side policy are measures used to increase aggregate supply in an economy

Supply side policies

• Education and training

• Infrastructure spending

• Labour market reforms (reforms used to increase the quality, quantity and productivity of labour)

- Reduced Labour laws

- Less Trade union power

- National Minimum wage

• Low direct taxes and increased incentive to work

• Reduced Regulations

• Privatization

How Supply side policies help achieve macroeconomic aims

Economic Growth - increased output increases GDP

Full Employement - Increased output means more labour is required to produce

Stable Prices - More supply to meet demand of consumers

Balance of payment stability - No pressure on exports

Redistrubition of Income - Increased training and education can benefit low income indiviuals

Enviromental Sustainablity - Can tax

Economic Growth

An increase in the output of goods and services in an economy

Real GDP

The actual output of goods and services in an country adjusted for inflation

Factors affecting Economic Growth and Recession

1. Quantity of Goods and Services

2. Quality of Goods and Services

3. Change in Deman

Recession

When theres a economic decline for a period longer than 6 months