Answer to Question #154362 in Macroeconomics for Abdul

Question

Evaluate supply-side policies that could be used to increase the UK's rate of economic growth. (20 marks)

Answer 1

1.Privatisation-it involves selling state owned assets to private sector with the aim of improving incentives.

2 Deregulation - involves allowing new firms to enter the market with a view of opening monopolies to competition.

3.Income tax cuts - involves giving greater incentives to employees work for longer hours.

4.Remove regulations-this makes it easier to build new factories and housing.

5 Education - involves increasing funding to schools and universities so as to improve labour productivity.

6 Vocational training - involves having government schemes to provide new skills to those who lose jobs.

7 Housing Supply - involves increasing supply of council housing which improves geographical mobility.

8.Public Sector Investment especially in infrastructure improves transport and reduces costs.

9.Reduce welfare benefits - involves increasing incentives to get a job.

10.Free trade agreements - involves reducing tariff barriers and other obstacles to trade.