What you’ll learn5 learning objectivesChoose one objective for a focused lesson, or study the complete topic.3.7.1Goals of supply-side policies• Supply-side policies aim to increase productive capacity and long-term growth• Goals include competition, efficiency, labour market flexibility, lower inflation, international competitiveness, and incentives for innovationSyllabus objective3.7.2Market-based supply-side policies• Competition policies include deregulation, privatization, trade liberalization, and anti-monopoly regulation• Labour market policies include reducing union power, reducing unemployment benefits, and abolishing minimum wages• Incentive policies include personal income tax cuts, business tax cuts, and capital gains tax cuts• Diagram: AD/AS and LRAS showing effects of supply-side policies• Diagram: minimum wageSyllabus objective3.7.3Interventionist supply-side policies• Interventionist policies include education, training, health care, research and development, infrastructure, and industrial policies• These policies target quality and quantity of factors of productionSyllabus objective3.7.4Demand-side and supply-side interactions• Supply-side policies can have demand-side effects• Fiscal policies can have supply-side effectsSyllabus objective3.7.5Effectiveness of supply-side policies• Market-based constraints include equity issues, time lags, vested interests, and environmental impact• Interventionist constraints include costs and time lags• Market-based strengths include improved resource allocation and no direct burden on the government budget• Interventionist strengths include direct support for sectors important for growth• Evaluation considers growth, unemployment, and price stabilitySyllabus objective
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