Answer to Question #263325 in Macroeconomics for Nikhilesh

Question

Discuss the effectiveness of supply side policy in increasing the supply of enterprise to the economy(12)

Answer 1

Solution:

Supply-side policies are government efforts to boost economic productivity and efficiency. If successful, they will shift aggregate supply (AS) to the right, allowing for higher long-run economic growth.

Supply-side policies such as free-market supply-side policies tend to increase competitiveness and free-market efficiency. Similarly, interventionist supply-side policies that involve government intervention tend to overcome market failure through enhanced government spending on transport, education, infrastructure, and communication.

All these policies are efficient in ensuring there is an increased supply of enterprise to the economy through enhanced productivity.