Supply-Side Policies
THESE ARE MY FAVOURITES! Probably because I'm optimistic and not prone to SHORT-TERMISM (evaluation point for government intervention right there). Basically, the purpose of these policies is to shift the LRAS curve to the right, which has the effect of improving all of the MEPOs simultaneously. Tip, never refer to the macroeconomic policy objectives as MEPOs in your essays straight away, you can after the first time you have called the by their full name then put 'MEPOs' in brackets, because some examiners will be unfamiliar with the term. Anyway, back to the point. In the short run, there will almost always be conflict between the MEPOs, e.g. the Phillips Curve showing the conflict between inflation and unemployment. However, with education and training, for example, we can improve all four! How, you may ask? Well, by increasing the human capital of our workers, we can become more efficient and out output will increase. Education may lead to more ENTREPRENEURIALISM, which means that our products will be cooler (you know what I mean), increasing their demand. As labour is a derived demand, this means more jobs, which will lower the level of unemployment. On top of this, we will be exporting more, improving our BALANCE OF PAYMENTS ON CURRENT ACCOUNT. Finally, inflation will fall due to a lower price level as production becomes more efficient, and cheaper.