Objectives Of Supply Side Policy: Increasing Productivity And Productive Capacity
Economics notes
Objectives Of Supply Side Policy: Increasing Productivity And Productive Capacity
➡️ Supply side policies are economic policies that aim to increase the productive capacity of an economy, leading to increased output and employment.
➡️ These policies focus on improving the supply side of the economy, such as through tax cuts, deregulation, and increased investment in infrastructure and technology.
➡️ As a result, these policies can shift the Long Run Aggregate Supply (LRAS) curve to the right, leading to increased output and employment at any given price level.
What is the main objective of supply side policy?
The main objective of supply side policy is to increase productivity and productive capacity in the economy. This is achieved by promoting investment, innovation, and entrepreneurship, which in turn leads to higher levels of output and employment.
How does supply side policy increase productivity?
Supply side policy increases productivity by removing barriers to production, such as excessive regulation and taxation. It also encourages investment in new technologies and infrastructure, which can improve the efficiency of production processes. Additionally, supply side policy promotes education and training, which can enhance the skills of the workforce and increase their productivity.
What is the relationship between productive capacity and economic growth?
Productive capacity is a key determinant of economic growth, as it determines the maximum level of output that an economy can produce. By increasing productive capacity through supply side policy, an economy can sustain higher levels of growth over the long term. This can lead to higher living standards and greater prosperity for the population as a whole.