Supply side policies
Definition. Supply side policies are government measures aimed at increasing the productive capacity and efficiency of the economy by improving the quantity or quality of factors of production. They seek to shift the long run aggregate supply curve to the right, raising potential output.
Examples include investment in education and training, infrastructure, research and development incentives, and measures to improve labour market flexibility. They can lower inflation and unemployment together but often take time to bear fruit.
This term belongs to Supply Side Policies in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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