2. What Are they?
• Supply Side Policies are policies which are
designed to increase the ‘productive
potential’ of an economy
• They tend to be associated with the right
of the political spectrum
• However governments of any colour may
use them!
3. What do they set out to do
• They hope to
achieve an
increase in Long
Run Aggregate
Supply
• As shown in the
diagram
4. What is a supply side policy
• Improvements to Education
– Increases productivity and quality of the
Labour force
• Tax Cuts
– Encourages an increase in supply of labour,
incentive to work
• Cuts to Corporation Tax
– Attempts to stimulate investment from
business
5. What is a supply side policy
• Deregulation
– Aims to increase efficiency as business
spends more time doing business than red
tape
• Privatisation
– Makes firms more efficient as they are ruled
by Market Forces, inefficient firms go out of
business
• Cutting Benefits
– Encouragement to work
6. What is a supply side policy
• Curbing powers of Trade Unions
– If power is reduced it lowers demands for
wage rises and makes workers more flexible
in working
7. Evaluation of Supply Side Policies
• SSPs will alter the economy in the long
term
• Classical and Keynesian Economists
disagree on the approach to them
• Classical Economists want a free market
approach
• Keynesians look for a more
interventionist approach
