Supply-side policies can have microeconomic as well as macroeconomic effects
Supply-side policies change how the whole economy performs, but they also change how individual markets and workers behave. The same policy can operate at both levels at once.
Real World
When the UK cut the top rate of corporation tax from 28% to 19% between 2010 and 2017, the macroeconomic effect was higher business investment, while the microeconomic effect was increased competition as firms in specific sectors like financial services expanded capacity.
Exam Focus
Always provide one micro and one macro effect to access the full range of marks — single-level answers are capped at Level 2 in most mark schemes.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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