a) Policies

a) distinction between market-based and interventionist methods

b) market-based and interventionist policies: to increase incentives, to promote competition, to reform the labour market, to improve skills and quality of the labour force, to improve infrastructure

supply-side policies = policies aimed at shifting LRAS

• interventionist policy = the use of government intervention to directly affect LRAS

  • eliminate market failure

• market-based policy = the reduction of government intervention to liberate the free market and increase market efficiency

aims

creating employment incentives → quantity of labour

• interventionist

  • infrastructure projects

  • apprenticeship schemes/subsidised employment

• market-based

  • reducing direct taxes

  • reducing unemployment benefits

reforming the labour market → quantity/quality of labour

• interventionist

  • government expenditure on education

  • housing for occupational mobility

• market-based

  • reducing minimum wage

  • reducing trade union power (notice period/voter turnout/secondary action)

promoting firm competition → quantity of land + quality of capital

• interventionist

  • preventing large mergers

  • antimonopoly laws (predatory pricing/tying agreements/exclusive deals)

• market-based

  • trade liberalisation

  • deregulation/privatisation