1. focus on aggregate supply
2. given successful, AS curve will shift to the right

Tplyes of Supply Side polic

• Market Oriented Policy
• Interventionist Policy

Market Oriented Policies

• to encourage and reward INDIVIDUAL enterprise and INITIATIVE.
• to put more reliance on MARKET FORCES and competition

1. Cuts in tax rate : incentive for people to work harder given more disposable income. increases productivity given an increase supply in labour, slowing down wage increment and reducing cost of production

( a cut in coporate tax will increase after tax profit and prompt research and development, investment, an component of AD)

Labels: incomplete supply side notes