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Supply side policies - Coggle Diagram
Supply side policies
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The instruments are used to encourage higher levels of outputs and employmen. They include tax incentives, subsidies and regulations. Policy aims and actions can sometimes conflict.
For example: Raising taxes or interest rates to reduce prices inflation may reduce employment and economic growth in output and incomes
Aim to increase economy growth by raising the the productive potencial of the economy. An increase in the total supply of goods and services will requier more labour and other resources to be employed, will reduce market prices and provide more goods and services for exports
Supply side policy instruments aim to encourage firms and employees to become more productive and to remove any barries that may prevent this.