Evaluating the role of aggregate supply / challenges reforms for economic Growth.

Question 1. Explain how supply side policies can influence the economic activities in a country. [10]

Solution should contain the following content with relevant key terms.

=> Introduction and definition of key terms supply side policies and economic activities.
=> Explanation of Supply side policies and their effect on economic activities.
=> Governments interventionist policies
      => Training and education=> skilled workforce => increases productivity => improving quality and increasing AS=> rise in economic activities
     => improved health care services
     => investment in Research and development
     => improving infrastructure
     => Liberal industrial policies
=> Some market based policies can also be explained:
      => Encouraging competition
      => Labour market reforms
      => Incentive related policies


Question 2: Evaluate what often prevents government from pursuing greater supply side regulating reforms.

Format for the solution

Introduction [ Key terms, supply side regulating reforms, government ]

Points supporting the arguments presented in the question.

Points explaining the limitations of arguments presented

Conclusion (depend on the strength of the arguments presented by you)

=> Introduction: explaining key terms

=> Points supporting why government should favour regulating reforms.

=> Reduces the inflationary pressure

=> Makes market more efficient

=> Increases competitiveness for the domestic manufacturers
=> Incentivising the efficient producers

=> Increase exports and reduce imports as rise in efficiency will lead to fall in average cost of production.  

=> Points that prevents the government to pursue 

=> Impact on government budget => 

=> Adverse impact on equality =>

=> Effects on the environment =>
=> Reduces the power of ruling parties to influence the market =>

=> May increase the power of foreign nations through MNC's => which have adverse impact during              the emergencies.

=> Increase unemployment in short run => seriously limit the prospect of ruling party (democratic countries)  => Social unrest due the militant trade unions => As regulatory reforms will reduce the collective bargaining power of trade unions => social implications if trade unions go violent 

=> Conclusion: Depending you your arguments.