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SUPPLY-SIDE POLICIES - Coggle Diagram
SUPPLY-SIDE POLICIES
MARKET-BASED
encouraging competition between firms (innovation)
Privatization because business enterprises are more efficient due to them being profit driven
Weakening power of trade unions so businesses can hire more workers for lower costs
Reducing unemployment benefits to incentivize searching for work
Decreasing business tax (as supply-side)
Provides the business with more capital to invest into R&D
(As demand-side) boosts AD in economy
INTERVENTIONIST
Government health care and education services
Funding research and development
Investment into infrastructure
For small/medium businesses (SMEs)
-tax cuts/breaks
-lower interest loans
-free business guidance
Goal of supply side policy:
(shifting the LRAS to the right)
increasing economy's productive capacity (LR Growth)
Improving competition and efficiency (innovation)
Reducing unemployment
Reducing costs to increase business innovation
HOW TO IMPROVE/INCREASE FOP
LABOUR
government
Subsidize education (making primary/secondary education free)
investing in human capital (providing scholarships)
Regulating education (making it compulsory to attend school)
businesses
Investing into improving your human capital (send them to training)
Optimizing workspace/work flow (division of labour)
Using technology to their advantage, increasing productivity
LAND
government
government
CAPITAL
government
businesses
ENTERPRISE
government
tax cuts/reduce corporate tax (encourage businesses to expand)
subsidize businesses (encouraging innovation)
Create competition through privatization (more competition = more efficiency and innovation)
businesses
Collaboration: Work with other business