Supply-side policies
What Supply-side policies means in Economics A-Level, as defined for AQA.
Definitions of Supply-side policies
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Reference: AQA
Deliberate government interventions, such as reducing corporation tax, deregulating markets, or subsidising education, designed to increase the productive capacity of the economy.
The primary tool in the long run to reconcile conflicts, shifting the long-run aggregate supply curve to the right through investment in education or infrastructure.
Policies that improve the productive capacity of the economy, such as deregulation or education investment, shifting the long-run aggregate supply curve rightwards.
Policies such as education and training reduce structural unemployment by improving occupational mobility, though retraining involves significant time lags.
Policies that use tax changes to alter personal incentives, expanding potential output and improving the underlying trend rate of economic growth.
Policies shifting long-run aggregate supply, which take much longer to take effect than factors shifting short-run aggregate supply.
Topics that use Supply-side policies
- Aggregate demand and aggregate supply analysis (AQA A-Level)
- Employment and unemployment (AQA A-Level)
- Possible conflicts between macroeconomic policy objectives (AQA A-Level)
- Supply-side policies (AQA A-Level)
Related terms
- Natural rate of unemployment
- Negative output gap
- Cyclical unemployment
- Long-run aggregate supply
- Long-run Phillips curve
- Macroeconomic objectives
- Macroeconomic performance
- Productive capacity
Using Supply-side policies in the exam
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