Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Economics 2.6.3
Economics- Edexcel 2.6.3
| Term | Definition |
|---|---|
| Supply-side policies | policies that improve the productive potential of an economy, illustrated by an outward shift of LRAS |
| 2 types of supply-side reforms | market-led policies and state/government intervention |
| Market-led policies | designed to make markets work better and give the private sector more freedom |
| State / government intervention | intervention in markets to overcome market failures |
| What do supply-side reforms affect? | short and long run AS, but usually focused on LRAS |
| Time frame on supply-side reforms | can be short or long |
| Main aims of supply-side policies look to improve/increase | incentives to look for work/labour & capital productivity/occupational and geographical mobility of labour/investment/competition/sustained non-inflationary growth/new businesses/living standards & regional economic balance |
| What happens if supply-side policies work? | sustained improvement in trade-off between inflation & unemployment/flexible to external demand & supply-side shocks/better living standards/less unemployment/high competitiveness |
| Interventionist supply-side policies | involve government intervention to overcome market failure |
| Examples of interventionist supply-side policies | state investment in public sector/minimum or living wage/higher taxes on wealthy/active regional policy/selective import controls/management of exchange rate/nationalisation |
| Active regional policy | the government's policy to boost economic activity in a specific region of the country or trading area such as the EU |
| How can human capital be improved? | sustained gains in average educational attainment, more and better quality training, higher real incomes allowing people to consume more knowledge, inflow of migrants |
| R&D | research and development |
| Biggest barriers to innovation | risk aversion, uncertainty about firms’ ability to exploit research profitably, lack of high-skilled workers in key research industries |
| Product innovation | small-scale, frequent subtle changes to the characteristics and performance of a good or service |
| Process innovation | changes to the way in which production takes place or is organised |
| Creative destruction as a term was created by who? | Joseph Schumpter |
| Creative destruction meaning | complete upheaval of the established order in the pursuit of innovation |
| FDI | foreign direct investment |
| Policies to attract FDI | attractive rates of corporation tax,soft loans & tax reliefs, trade & investment agreements, flexible labour markets, high quality critical infrastructure, open capital markets to allow remitted profits, lower unit labour costs |
| market-based supply-side policies | cut gov spending, lower taxes, reduce red tape, improve flexibility, competition policies, privatisation, opening the economy |
| Possible drawbacks of market-led supply-side policies | low taxes don’t improve work incentives, increases in incomes and wealth inequality, instability when deregulating markets, employment and income insecurity |
| Major supply-side weaknesses of UK economy | low R&D spending, low capital investment spending, skill shortages, high economic inactivity in labour market, low labour mobility, ageing infrastructure, regional economic imbalances, productivity gap |
| Strengths of the supply-side in the UK economy | emerging industries like renewable energy, life sciences, creative sector, financial technology, higher education, nanotechnology |
| Aggregate supply | total planned output of goods and services at a given time and price level |
| Competition policy | any policy which seeks to promote competition and efficiency in markets and industries |
| demographic change | any change in the population |
| deregulation | reducing barriers to entry to make the supply-side of an industry more competitive |
| Free-market policies | policies to increase competition |
| Full capacity output | level of GDP where all available factor inputs are fully employed |
| hysteresis | when a sustained period of very low AD can cause permanent damage to the supply side |
| incentives | used to make goods and services markets work more efficiently and therefore creating greater productive capacity |
| Income tax cuts | lowering direct taxes to improve work incentives and productivity |
| infrastructure | investment in telecoms, rail, ports, roads, energy and other utilities |
| Interventionist policies | involve interventions to overcome market failure that might limit supply-side potential |
| Labour market flexibility | market for people with many short-term job contracts and unpredictable earnings |
| Labour productivity | measures efficiency |
| Pro-market supply-side policies | policies focus on reducing the size of the state and extending the role of market forces in allocating scarce resources |
| privatisation | involves selling state-owned assets to the private sector |
| shocks | unexpected events that can affect both AD and AS |
| Trade liberalisation | lowering import tariffs and eliminating quotas to increase competition |
| Zero-hours contract | workers employed without any guarantee about the amount of work they will have |
Created by:
jessharris
Popular Economics sets