Costs and Benefits of Supply-side policies (Costs (Cost (some of these…
Costs and Benefits of Supply-side policies
some of these policies are very expensive e.g. infrastructure, education, etc.
For example, a cut in taxes may mean workers could work less as they can get the same wages for less time.
supply-side policies can have a negative effect on the distribution of income, especially reducing benefits.
Resistance to policies
Some people will resist these policies e.g. trade unions will go against policies restricting their power.
Supply-side policies can take a long time to put into effect.
e.g. infrastructure takes a long time to build.
Improves the balance of payments
They lead to a higher quality of resources, leading to more competition in price and quality which helps achieve a balance between imports and exports.
Increases economic growth
they help increase average standard of living and economic welfare.
A rise in aggregate demand and supply means more worker will be employed.
They can combat inflation as they cause efficiency and production to grow resulting in a higher aggregate demand.
Targets specific markets
Supply-side can target certain parts of the economy e.g. where there are skill shortages to improve efficiency.