A better education and health care will improve the labors’ output, as productivity will be higher. Further to this, people will be more able to save more from their increase in income, which allows higher rates of investment and therefore increase in growth. The graph above is a PPF curve, which shows consumer goods against capital goods. Since there is an increase in Aggregate demand, this will potentially lead to an increase in economic growth as seen from the graph above. However, on the other hand an excessively equal
Market-Oriented supply-side policies are changed when the government reduces ordinance and make the market to work more freely. For example, reducing or elimination the power of trades unions and minimum wages can reduce labor market inflexibility’s. Using the tax system to furnish encourage and reward to help irritate factor output, rather than to alter demand. This general means reducing direct tax rates, including income and corporation tax. Lower income tax will act as a reward for unemployed workers to join the labor market, or for existing workers to work harder.
Output will then be increased, and will boost the economy. Inequality also encourages the labour force to increase education and skill level. With more individuals seeking education to become qualified for better jobs, thus earning a better income and having a better living standard. With better qualified people, the unemployment rate will drop, productivity will improve and increase economic growth. Hence why we should make education more available for the country.
There is a failure to realise that long term better economic welfare also means general higher standards of living, as people have enough money to buy everything they need and some of what they want, competition is rife so drives quality up and prices down, and the government are able to take in more taxes from firms who are much healthier financially. This mass employment may lead to more jobs, but the workers themselves or the way they’re used is hugely inefficient. Another reason that labour production in the UK is so low is the lack of competition. There is a strong body of evidence that competition enhances productivity. So, with a lack of one there is a lack of the other.
• Introduction: Good intention may have both consequences depending on how it guided whether by error or correct decision. The best example is the minimum wage regulation which means to raise the wages to improve living conditions but actually influence many to economy. Minimum wage is the lowest hourly, daily wage of an employee. Many economists have different ideas of an in crease in minimum wage, the matter in the views on disadvantages and advantages being disputed by many advocates. The advantages from higher minimum wage can have a positive effect on the whole economy flows, while the disadvantages have some negative effects on employment rates.
If there is spare capacity (negative output gap), then demand side policies can play a role in increasing economic growth. For example if we decrease interest rates, we will increase the demand in the economy as people have more money as their mortgage costs are decreased. It is the same idea with lowering taxes - this will boost demand, as people have more money to spend as less is taken away from them by the government. Aggregate demand is made up of consumption (consumer spending, Investments Government spending and Exports (minus) imports (Net exports). If anything affects these factors will result in affecting the demand.
Changes in operations will help increase job exports. For the U.S., companies export new capital equipment and production to help create potential competitors. Importing countries demand that exporters shift part of their production to the purchasing nation in order to gain their sale over others. The emphasis on exports to developing countries combined with the focus on sales of new capital goods may introduce inappropriate technologies into nations with high unskilled labor pools. Exports of mining, petroleum, and infrastructure equipment may help multinational corporations and developed countries access cheaper raw materials, with few benefits for the residents of developing countries.
If unemployment falls, less people will be claiming unemployment benefits and other similar pay-outs from the government, this will allow a lot of tax to be spent on other things, such as expanding public services further, which also leads to an increase in living standards. Another benefit of economic growth is the increase in confidence, with all these new goods and services on offer to the country, the consumer
Since privatisation, companies such as BT, and British Airways have shown degrees of improved efficiency and higher profitability due to the competitiveness within their respective industries. It can also be noticed that vast improvements in technology have occurred due to investment in order to achieve these efficiency and profit increases. As efficiencies increase, firms are more willing to produce at a lower price, effectively shifting the supply curve to the right. This causes a reduction in the price from P1 to P2 and an increase in the equilibrium quantity from Q1 to Q2. Another possible advantage of privatisation is an increase in competition as the privatisation of state owned monopolies usually occurs at the same time as deregulation of the industry.
In order to close this gap, a government will typically increase their spending which will directly increase the aggregate demand curve (since government spending creates demand for goods and services). At the same time, the government may choose to cut taxes, which will indirectly affect the aggregate