Supply side policies on inflation - is this sufficient analysis?

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JediArron
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So I'm practising the OCR AS Unit 2 past papers.

I'm wondering if this is sufficient analysis? I intend to do 3 paragraphs with the same level of analysis. Would I get to the 12/18 point with 3 paragraphs of this depth? (I will obviously include evaluation to go for 18/18 but this is just focused on one paragraph)

Question: Discuss the extent to which supply side policies can be effective in reducing inflation.

My first point paragraph (after definitions paragraph)

Education and training can reduce inflation. Setting up more courses means that more unemployed people are recruitable to firms, because more people have the skills to work. Therefore, unemployment decreases and production levels increase. Aggregate supply shifts to the right at a lower price level, hence inflation has reduced.
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gr8wizard10
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If this is A2 you can relate your point back to the phillips curve (if AS I would recommend learning Phillips Curve as that's strong analysis for inflation and is fairly simple to learn). You can also include policies which increase LRAS.. Long term fall in Price level, cetaris parabus. Also you can talk about technological advancements or r&d shifting in SRAS as firms become productively efficient which leads to economies of scale (refer to diagram) reducing average cost. Although you have to remember it depends on what industries these effects occur on. If in the gaming industry for example it would have minimalistic effects on Inflation. Governments may choose to subside meaningful industries to support UK export markets to have increased competitiveness in global market as to gain exports, cetaris parabus would have a multiplier effect where jobs are created and supply shifts out (price level drops). There's a lot more you could talk about.

I'm doing AQA A2 atm so I'm not sure about how your questions are structured. I would assume for an 18 marker you would need atleast 5 links in the chain. To briefly expand your point I would say:

Government using supply-side policies > Increase spending on schools/education > More skilled workers in economy > Long-term effects of increased productivity > Lower average cost for firms > potentially increased employment > AS Shifts out (on graph will show reduction in price level).
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JediArron
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(Original post by Abdul-Karim)
If this is A2 you can relate your point back to the phillips curve (if AS I would recommend learning Phillips Curve as that's strong analysis for inflation and is fairly simple to learn). You can also include policies which increase LRAS.. Long term fall in Price level, cetaris parabus. Also you can talk about technological advancements or r&d shifting in SRAS as firms become productively efficient which leads to economies of scale (refer to diagram) reducing average cost. Although you have to remember it depends on what industries these effects occur on. If in the gaming industry for example it would have minimalistic effects on Inflation. Governments may choose to subside meaningful industries to support UK export markets to have increased competitiveness in global market as to gain exports, cetaris parabus would have a multiplier effect where jobs are created and supply shifts out (price level drops). There's a lot more you could talk about.

I'm doing AQA A2 atm so I'm not sure about how your questions are structured. I would assume for an 18 marker you would need atleast 5 links in the chain. To briefly expand your point I would say:

Government using supply-side policies > Increase spending on schools/education > More skilled workers in economy > Long-term effects of increased productivity > Lower average cost for firms > potentially increased employment > AS Shifts out (on graph will show reduction in price level).
Thank you very much, this is for AS, brilliant explanation

Although it's production level (productivity is micro-economics) but thanks for adding the extra point in the analysis to help me deepen my analysis of the point, it's exactly what I was looking for.
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gr8wizard10
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(Original post by JediArron)
Thank you very much, this is for AS, brilliant explanation

Although it's production level (productivity is micro-economics) but thanks for adding the extra point in the analysis to help me deepen my analysis of the point, it's exactly what I was looking for.
You can also refer to productivity in macro. Increased investment into machinery/education increases the countriy's productive potential. (Relate back to PPF/LRAS)
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JediArron
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(Original post by Abdul-Karim)
If this is A2 you can relate your point back to the phillips curve (if AS I would recommend learning Phillips Curve as that's strong analysis for inflation and is fairly simple to learn). You can also include policies which increase LRAS.. Long term fall in Price level, cetaris parabus. Also you can talk about technological advancements or r&d shifting in SRAS as firms become productively efficient which leads to economies of scale (refer to diagram) reducing average cost. Although you have to remember it depends on what industries these effects occur on. If in the gaming industry for example it would have minimalistic effects on Inflation. Governments may choose to subside meaningful industries to support UK export markets to have increased competitiveness in global market as to gain exports, cetaris parabus would have a multiplier effect where jobs are created and supply shifts out (price level drops). There's a lot more you could talk about.

I'm doing AQA A2 atm so I'm not sure about how your questions are structured. I would assume for an 18 marker you would need atleast 5 links in the chain. To briefly expand your point I would say:

Government using supply-side policies > Increase spending on schools/education > More skilled workers in economy > Long-term effects of increased productivity > Lower average cost for firms > potentially increased employment > AS Shifts out (on graph will show reduction in price level).
Also the lower average cost thing is more of A2 than AS, I think it's valid enough to say because there are more skilled workers then more people are employable for jobs and this is the reason why AS shifts outward (rather than lower AC due to economies of scale)

You can say that more workers = lower wages offered = lower cost of production but my point was more about there being more potential to produce as the gaps where workers were needed (but no one was skilled enough) has been filled
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gr8wizard10
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(Original post by JediArron)
Also the lower average cost thing is more of A2 than AS, I think it's valid enough to say because there are more skilled workers then more people are employable for jobs and this is the reason why AS shifts outward (rather than lower AC due to economies of scale)

You can say that more workers = lower wages offered = lower cost of production but my point was more about there being more potential to produce as the gaps where workers were needed (but no one was skilled enough) has been filled
That's actually a better way of putting it for macro. I had that problem and still do mixing macro and micro.
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