The purpose of supply side policies is to lower the rate of splashiness and reducing price levels while still increasing the reliable GDP. Supply side policies are policies made by the governance aimed at increasing aggregate supply. The government whitethorn cut in various types of policies that aim to increase the quantity and quality of jab and of capital.
Many such policies focus upon fillips for the companies. For example a government may give a alliance a reduction in tax. A government may do this if they believe that the company will either dedicate in capital or labour. With the money saved from taxes a company has many options, they burn hire more people or train their menstruation staff. Both these methods will increase the productivity of the company. Another flair a company can increase production is to invest in capital (machinery and technology). An example of this is if the Canadian government gave cover a tax break. Ford in turn would probably invest in their machinery and make it more effective and maybe train their workers. Both of these things would in turn shift the AS to the right, as in the diagram. This therefore lowers the price level and increases trustworthy GDP.
Another supply side policy is the reduction of income tax.
This raises the opportunity appeal of not working. This is because if the soul would earn a greater luck of what his wage is compared to before with a higher income tax. This is another incentive based supply side policy. It encourages workers to work more as they will earn more money. For example, if a person is earning 20 000 $ and his original income tax is 40 % but reduced to 20%, this person will make an extra 4 000 $. This person would have...
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