How supply-side policies can help to achieve supply-side improvements in the economy
Supply-side policies are government actions that raise the economy's productive capacity. They do this by improving incentives, boosting efficiency, or increasing the quality of labour and capital.
Real World
Germany's dual apprenticeship system — a supply-side policy combining classroom learning with workplace training — is credited with delivering one of the lowest youth unemployment rates in Europe, a measurable supply-side improvement in labour quality.
Exam Focus
For 'assess' questions, always challenge supply-side policies on time lags — improvements in skills or infrastructure take years to raise productive capacity.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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