How supply-side policies can affect unemployment, the rate of change of prices and UK external performance, as reflected in the balance of payments on current account
Supply-side policies can reduce unemployment, keep inflation low, and help the UK sell more abroad than it buys. They do this by making the economy more productive and competitive.
Real World
Post-Brexit UK trade frictions raised costs for British exporters, worsening the current account — demonstrating how a deterioration in supply-side competitiveness directly feeds through to external performance.
Exam Focus
Link each supply-side effect to a specific macroeconomic objective — unemployment, inflation, or current account — to secure full chain-of-reasoning marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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