Mr HounselEconomics

ILO:

a) Distinction between market-based and interventionist methods

b) Market-based and interventionist policies:
o to increase incentives
o to promote competition
o to reform the labour market
o to improve skills and quality of the labour force
o to improve infrastructure

c) Use of AD/AS diagrams to illustrate supply-side policies

d) Strengths and weaknesses of supply-side policies

A supply-side policy is a government scheme to promote market forces, cut costs and to raise the full employment level of output.

Market-based policies focus on the power of the free market, or allowing the forces of supply and demand to eliminate equilibria imbalances.

The role of the government in market-based policies is limited since it tends to interfere with the market mechanism. Conversely, interventionist policies focus on the need for the government to intervene in
markets to achieve a goal.

For each of the following policies you'll need to be able to explain why they impact AS and evaluate what factors might influence this?
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Supply side & Unemployment: In contrast to fiscal and monetary policy supply side policy can be targeted directly in the labour market through education and training changes. This means that it becomes the only policy that can effectively deal with structural unemployment, by providing labour with appropriate skills to re-enter another labour market.

Assess the potentinal economic effects of the UK's Government's apprenticeship programme

Now that many UK firms have been privatised, the standard argument that a government can sell off state-owned businesses is losing its potency.

It is stronger to argue that competition between firms can be improved, with descriptions and examples of how this might be achieved.

​Similarly, in relation to reducing trade union power in the UK, students should focus on additional measures that might be undertaken, rather than what has already been done.

Related article:
Privatisation versus Nationalisation

Assess if the Government should renationalise the railways to support economic performance?

If the economy currently has a negative output gap then supply side policy is not going to be as effective as monetary policy for example in shifting AD and reducing cyclical unemployment.

Supply side policy will involve an element of Government spending and/or encourage grater levels of Investment which will shift AD.

​However a growing negative output gap could be associated to low levels of confidence and a recession, therefore unemployment is likely to increase as economic agents do not respond to the Govt. policy and a negative multiplier continues until demand side management policies are put into place.