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Economics for Business

   

Added on  2020-07-22

15 Pages4123 Words273 Views
Economics for Business

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY..................................................................................................................................1Assessing the extent to which economic growth can be facilitated through supply side policies.....................................................................................................................................................1Discussing the manner in which government authority undertake fiscal and monetary policiesto stimulate economies................................................................................................................6REFERENCES..............................................................................................................................11

INTRODUCTIONEconomics is highly concerned with the production, consumption as well as activitiesthat are related to the transfer of wealth. Field of economics is highly wide which in turn entailstheories and quantitative methods which in turn assist government or legal authorities in makingcontribution in economic growth. There are several tools such as monetary and fiscal policy thatis undertaken by the government authorities to balance economic condition as well as growth.Economics and associated tools also provide assistance in evaluating the relationship of firmwith labour, capital and product market. In this, the present report will provide deeper insightabout the supply side policies that fosters economic growth. It depicts and providesunderstanding about the tools like fiscal and monetary policies. Besides this, report will shedlight on the tools that are employed by government authority for stimulating economies. MAIN BODYAssessing the extent to which economic growth can be facilitated through supply side policies Supply side policies may be served as micro-economic framework whose one of themain objectives is to making market and industries more efficient. Thus, such policies are highlyconcerned with the smooth operations of market that contributes in real national output with thevery high pace. Hence, supply side policies may be defined as a branch of economics that helpsin assessing the manner in which productive capacity of economy can be enhanced (Linnemayrand Rice, 2016). Supply side policies offer better results in the case of monetarist and freemarket economies. Such kind of economies laid high level of emphasis on making labour marketmore flexible. On the other side, some policies allow government intervention which in turnhelps in preventing the possibilities of market failure (Tierney and et.al., 2016). Governmentauthorities make use of supply side policies for meeting an objective such as maximization ofproductivity. By undertaking supply side policies government authority can shift aggregatesupply to the right side. UK government authority considers several objectives while making focus on theadoption of supply side policies. The main aims behind undertaking supply side policies are toimprove the level of incentives and make investment in the skills of people. Enhancement of

labour and capital productivity is another aim of higher authorities that stimulate them in relationto adopting supply side policies. Enhancement in occupational and geographical mobility oflabour is also another main objective of government that encourage them to undertake supplyside policy (Leuz and Wysocki, 2016). This in turn enables UK government in reducing the rateof unemployment and helps in fostering growth. To increase investment as well as research &development spending level government lays more emphasis on the adoption of supply sidepolicies. Supply side policies also provide platform in regards to sustained non-inflationarygrowth. In such policy framework, higher authorities make focus on improving competitivenessvia innovation (Knittel and Pindyck, 2016). UK authorities also lay more emphasis onencouraging entrepreneur to convert their unique ideas into reality. Besides this, government alsoencourages existing firms to explore their business operations and functions significantly. Supply side policies that enhance market efficiency by reducing the level of governmentinterference includes following:Privatisation: In the case of privatization, state sells its own assets to the private sector.During the period of 1980 and 1990’s extensive privatisation campaign was introducedby the government authority (COHEN‐SETTON and et.al., 2017). At such time period,majority of the utilities such a gas, water and electricity was sold by government throughfloating on stock market. Reducing the level of income tax: UK authorities were reduced tax rate from 60% to 40%in the former times. However, overall tax burden was not fallen down because duringsuch time period indirect tax rate has been increased by the authority through the meansof VAT or indirect taxation. In addition to this, by reducing the power of trade union efficiency level of firms in UKcan be enhanced. Besides this, such policy also helps in reducing the level ofunemployment (Rémuzat and et.al., 2016). Further, reduction in the staff welfarebenefits is also one of the main aspects of supply side policies. Hence, it can be said thatsuch policy framework encourages unemployed people to take job. By providing clearand precise information about jobs concerned authorities can reduce the level of frictionalunemployment to a great extent (Supply side Economics in the UK, 2017). Along withthis, by deregulating the financial market government can foster competition and reduce

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