Sep 20, 2011 | Post by: Prateek Agarwal No Comments

Examples of Supply Side Policies

Supply Side Policies are difficult to implement. They take long to take into effect and sometimes controversial.

  • Wages – lower wages → frees up the labor market → makes a low paid job more attractive. To lower wages, the government would need to abolish minimum wage laws, decentralize trade union power, reduce of unemployment benefits, lower income tax and make hiring/firing easier and cheaper for firms
  • Capital Markets – increase competition between banks to make loans more attractive, reduce financial crowding out and make savings more attractive so there is more money for banks to use for investment
  • Entrepreneurship – lower marginal tax rates and encourage share ownership
  • Competition and Efficiency – removal of monopolies, encourage privatisation, free trade and inward investment
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