• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

"Discuss the Effectiveness of Supply Side Policies in Improving UK Economic Performance"

Extracts from this document...

Introduction

Kanak Shah Economics AS/b David Conquest "Discuss the Effectiveness of Supply Side Policies in Improving UK Economic Performance" Supply side policies are those designed to increase an economy's long-term growth and so increase aggregate supple or production. In terms of a graphical analysis, if supply side policies work, the long run AS (aggregate supply) curve would shift to the right. A number of various policies have been implemented to increase aggregate demand (AD). The first is deregulation. This involves removing laws and regulations which restrict competition. With deregulation, more firms will compete in the industry and the total supply of the good or the service will increase. A good example to look at is airline deregulation. All Europe flight routes were regulated by governments. There was not very much competition. With the introduction of deregulation, any airline company can fly on any routes that they bid for e.g. EasyJet and Buzz (all low cost airlines). This increases passenger numbers and there is more aggregate supply in the industry. ...read more.

Middle

Managers will also have greater responsibilities for ensuring continuity of production. Nevertheless, many state-run enterprises operate in areas where people have a basic right to enjoy the good or service without effective rationing by price. Examples include water, gas and electricity. Another argument against privatisation is that privatisation 'bonuses' are one-offs. Cutting income tax is another policy. The idea here is to encourage people to work harder and this increases supply. This works best when the marginal rate of tax is reduced, e.g. by doing overtime is a contribution to the economy. This is a positive point and in the short term leads to economic growth. However, reducing income tax indirectly raises things like V.A.T and this is a disadvantage as goods and services may become more expensive, causing people to consume and invest less. Cutting corporation tax is an additional policy. This should leave more funds for investment purposes which will have long-term benefits. ...read more.

Conclusion

Regional policy is the last policy. This involves specific help for individual parts of the country for high rates of unemployment. Advantages are that it reduces inequality of incomes and of opportunities. It also reduces the hardship associated with structural decline and reduces congestion in other regions. By reducing unemployment, regional policy reduces the waste and cost of keeping other on the 'dole'. Disadvantages are that there is little evidence that regional policy works to change long-term trends. Also, firms often move a very short distance to take advantage of the incentives but in doing so create no extra jobs or incomes. If supply side policy works, it will improve the performance of the economy by: * Reducing unemployment by increasing the incentive to work, improved training and education and reduced trade union power. * Raising economic growth and increased living standards. * Reducing inflation by raising the productivity of labour. * Improving the balance of payments by making the UK industry more productive and efficient. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Here's what a teacher thought of this essay

4 star(s)

****
A succinct explanation of supply side policies. All of them could be discussed further and some are not particularly well explained but a reasonable introduction to the topic.

Marked by teacher Dennis Salter 17/09/2013

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    How successful has the WTO been in achieving it’s objectives?

    5 star(s)

    However, the problem is that though tariffs have decreased, this is also due to an increase in trading pacts. In these trading agreements like the Andean Pact, NAFTA, Marcosur, the EU or the Asia Pacific Economic Cooperation, tariffs are lowered whilst all trade barriers against the rest of the world are kept up.

  2. Marked by a teacher

    Assess the importance of international trade to the UK economy

    4 star(s)

    EU, then the EU could benefit economies even more, in terms of gaining the lowest market price for goods that can be purchased from other areas of the world. Today it is a very unrealistic view that a country can be self-sufficient and not take part in international trade.

  1. How reliable are National income statistics as a means of comparing living standards between ...

    The black economy is motivated by tax evasion, strict health and safety rules, illegal migrants working. Nonetheless this part contributes this part contributes to the national income but goes unaccounted for, and so the measurement becomes unreliable. To measure living standards between countries problem arises because the national income of

  2. A study of Patent system in India in the light of Patent Cooperation Treaty.

    Under all patent systems, once this period has expired, people are free to use the invention as they wish. The limited term of a patent also furthers the public interest by encouraging quick commercialization of inventions, thereby making them available to the public sooner rather than later.

  1. The positive and negative effects of Globalization

    A free-market means that little is done to address re-distribution of wealth and money is not reinvested back into the community but directly to the company owners. These countries can be exploited by the MNC's and therefore receive little benefits.

  2. The Impact of Globalisation upon the Japanese Economy

    It has allowed the easier access to foreign currencies, which facilitates a higher flow of goods between countries, by relaxing laws that severely prevented foreign buying of currency and floating the yen. These drivers have helped boost Japan's trade, helping it recover from its recession.

  1. Evaluate strategies which may be used by businesses and governments to improve the competitiveness ...

    be able to compete much more easily since consumers will prefer to buy the most innovated and technological updated products. For example Steve Job?s firm, Apple spent $758 million on R&D during the first fiscal quarter of 2012. If we take Apple as an example which is one of the

  2. Evaluate strategies which may be used by businesses and governments to improve the competitiveness ...

    By investing on human capital, both price and non-price competitiveness will be improved as the workforce will be able to gain new skills to produce better quality goods, as well as increase productivity, increasing output produced in a given period of time and thus reducing costs of production.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work