Please enable JavaScript.

Coggle requires JavaScript to display documents.

Supply Side Policies (Interventionist Supply Side Policies (Investment…

- - - - Public education is a common policy in most countries. This has not always been true but has gradually become accepted as a necessary ingredient of a modern economy. Education improves the skills and productivity of the workforce as well. High levels of educational achievement are highly correlated with national income.
    - - Specific training for some jobs may not be offered in schools and may be offered by special job training centres established by the government. It helps businesses find productive employees and thus should enhance economic growth.
    - - In countries where public health is poor, it is di cult for children to regularly attend school, and worker absenteeism is chronic. If the government implements a working public health system, it may improve productivity of this.
        
        Investing in this three type of policies must estimate AD, however, the lingering effects of a well-trained, educated and healthy workforce should endure into the future, pushing LRAS outwards by improving labor and entrepreneurship.
  - - - The government can support the industry with reduced taxes, subsidized loans, and even direct subsidies. These all reduce the costs to the firms, and encourage more production.
    - - Compared to a (National Firm) their global competitors, they may currently be too small to enjoy the benefits of economies of scale. Governments can put down protective tariffs or quotas to keep foreign competition out until the firm is sufficiently large and developed.
- - - - Governments can discourage business by applying stringent or unnecessary regulation to markets. Deregulation is applied to reduce Bureaucracy as well as the required costs of complying with government rules. The rules under attack are typically intended as protection against some negative externality of production to do with product quality and safety, worker safety, or pollution control.
    - - Where monopoly power exists, it gives producers the ability to restrict output and increase prices. Anti-monopoly laws (also called anti-trust laws) seek to prevent or dismantle monopolies in the market.
    - - Privatization of public companies
    - - They opposed tariffs, quotas, and subsidies that encouraged dependence on the government. They encouraged free trade, reduction of trade barriers and open competition.
  - - - According to supply-side economists, reduce the incentive to find employment. is creates a disincentive for workers to accept jobs at lower wages during periods of unemployment, and thus prolongs the economy’s return to full employment.
    - - The minimum wage sets a price floor for labor, which creates a surplus of workers who will not be hired at the government-enforced wage rate. Higher wages reduce the profits of business and thus lower supply and may reduce employment even further.
    - - Restricting trade union power to organize or bargain collectively with employers would decrease their wage-setting power. In theory, more workers would then move more freely among employers and more employment will result.
  - - - A tax on business profits obviously diminishes profits. Cutting corporate taxes, it is said, encourages firms to produce more, shifting supply to the right, and possibly encouraging more employment. It taxes the gain made on a capital investment, such as the profit made when selling property or shares in a company. These taxes discourage investment. So reducing the tax will make these entrepreneurial risks more rewarding and encourage investment.
    - - Arthur Laffer, began advocating lower taxes on the basis that lower taxes (at the high end of the tax rate) would actually raise tax revenue, "Taxes had grown too high and a reduction would stimulate work to the extent that the greater income of workers would bring in increased tax revenue".
- - - - :
        
        In Theory this policies, improve the overall macroeconomic environment in which individual actors operate. Good policies would encourage productivity as well as create more and better factors of production. In this environment of productive surplus, growth is the logical outcome. Furthermore, increasing LRAS manages to expand the economy without generating inflation, a typical problem with expansionary demand-side policies.
        
        One of the main uses of Supply Side Policies is to solve Stagflation, one of the most serious challenges of macroeconomic policies. Stagflation is the mixture between, economic recession and rising inflation.