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    the question at hand is :

    to what extent can gov expenditure increase aggregate supply in poor regions?

    Now what i am unsure of is whether ALL supply side measures require funding e.g it is obvious that it is needed for education and training
    but how about reducing trade union power, reducing income tax, reforms to benefit system do these all require funding?

    Once i've dicussed which policies require funding i will go on to look at limitations of supply side policies because it's an evaluative ques. e.g time lags in seeing results of policies such as training, unequal distribution of income with low unemployment benefits. also AS will be ineffective if AD is low
    can anyone suggest any points to add? I'm unsure whether the evaluative bit is relevant....
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    (Original post by PrincessParadox)
    the question at hand is :

    to what extent can gov expenditure increase aggregate supply in poor regions?

    Now what i am unsure of is whether ALL supply side measures require funding e.g it is obvious that it is needed for education and training
    but how about reducing trade union power, reducing income tax, reforms to benefit system do these all require funding?

    Once i've dicussed which policies require funding i will go on to look at limitations of supply side policies because it's an evaluative ques. e.g time lags in seeing results of policies such as training, unequal distribution of income with low unemployment benefits. also AS will be ineffective if AD is low
    can anyone suggest any points to add? I'm unsure whether the evaluative bit is relevant....
    is this for a2?
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    As
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    (Original post by PrincessParadox)
    to what extent can gov expenditure increase aggregate supply in poor regions?
    Supply Side Policies:

    Supply side policies are policies aimed at raising the level of aggregate supply, mainly to increase economic growth. It is quite difficult to increase AS. All these policies are directed at increasing productivity, one of the four determinants of AS. There are 7 supply side policies, split into 3 sections:

    1. Labour Market

    • Restricting Trade Union Power

    By restricting the powers trade unions have, such as passing laws banning strike action, the government can make it easier for firms to introduce productivity-raising work policies that make their workers work harder without the fear of strikes.

    • Reducing Unemployment Benefits

    By reducing the Job Seeker's Allowance, the government can increase the amount of people looking for jobs, increasing the competition for jobs. Workers will adopt an "if I don't work hard enough, I'll be replaced" attitude and their productivity will increase.

    • Reducing Income Tax

    By reducing income tax, the government is effectively allowing workers to have a larger amount of their salaries for themselves. If taxes are low, incentives to work will be high as the worker will receive a larger portion of their wage.

    • Increasing Education and Training

    Education and training is one of the sub-factors of productivity, so it would make sense if it came up here. The government can either put more money into Education and training, or less. More money will improve the schemes, but less money could also have a desired effect as, by making people pay for their training and education, they are more likely to want to receive the benefits of it and pay more attention in classrooms.

    • Reducing Labour Immobility

    If workers can be moved to an area where there are job vacancies, then they will be adding to the employing firm's productivity. There are two types of immobility - geographical and occupational. They can both be overcome by government incentives.

    2. Capital Market

    • Increasing Investment

    Policies such as the '0% corporation tax of reinvested profit' policy can increase firms' spending on capital equipment, and therefore increase productivity, since the cost of machines will effectively be reduced (as the opportunity cost is increased)

    3. Goods Market

    • Privatisation

    This means selling government owned firms to private shareholders, opening up gaps for competition. This competition forces the firms to become very productively efficient, as the threat of going out of business is much higher than if the company was a public sector monopoly.

    Thought I'd copy and paste some of my revision notes for you. :cool:
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    my 7 are:

    Reducing Government Spending
    Cutting taxes
    Reducing trade union power
    Cutting Benefits
    Deregulating + Privatizing
    Make it easier for firms to se tup
    encouraging entrepreneur culture

    + those above (i know there are a few repeats)
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    Thanks for that but what im after is whether all these policies require funding and also how to evalute this question i.e what is the opposing arguement?
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    (Original post by PrincessParadox)
    Thanks for that but what im after is whether all these policies require funding and also how to evalute this question i.e what is the opposing arguement?
    no not all of the policies require funding - evaluate it by saying why supply side policies may not work -maybe talk about how objectives of keynesians and supply side economists
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    what board do you do? this is quite a difficult question
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    EDEXCEL
    the question is from the Anderton textbook though
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    "Now what i am unsure of is whether ALL supply side measures require funding e.g it is obvious that it is needed for education and training
    but how about reducing trade union power, reducing income tax, reforms to benefit system do these all require funding?

    Once i've dicussed which policies require funding i will go on to look at limitations of supply side policies because it's an evaluative ques. e.g time lags in seeing results of policies such as training, unequal distribution of income with low unemployment benefits. also AS will be ineffective if AD is low"

    That seems pretty good to me,
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    The brand new supply-side presentation here covers this AS Econ question:

    http://www.tutor2u.net/flash_econ_as.html

    Jim
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    (Original post by Jim Riley)
    The brand new supply-side presentation here covers this AS Econ question:

    http://www.tutor2u.net/flash_econ_as.html

    Jim

    very impressive stuff
 
 
 

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