Supply Side Economics – Pros and Cons

Laffer-Curve

Readers Question: What are the benefits of “supply-side” economics, particularly for the working class, the middle-class if you will? Supply-side policies encompass a range of different policies that seek to reduce tax rates and government intervention in the economy.  In the US, supply-side economics has become synonymous with the Laffer Curve theory and the Reagan …

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WJEC A-level economics revision guide

WJEC-A-Level-Economics-Revision-Guide
  • Specific WJEC A-level economics revision guide (units 1,2,3,4) – just £8.95
  • Updated for the new WJEC economics syllabus. Last updated June 2022.
  • E-book (comes in pdf format shortly after purchase.)
  • Also suitable for Eduqas. Eduqas is part of WJEC and it is the same syllabus.
  • Trademark simplicity and clarity of presentation.
  • Significantly expanded on previous version, with not just required knowledge, but also examples of evaluation for each topic.
  • For schools – See: Network License – A-level WJEC Economics (£105.00) (allowing unlimited use)

Inelastic supply

Supply is price inelastic if a change in price causes a smaller percentage change in supply. (PES of less than one) Example of inelastic supply – Price of rents falls by 20%; Q.Supply declines by 1%. PES = 0.05 Diagram of inelastic supply In this case, an increase in price from £30 to £40 has …

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The economics of discrimination

percieved-mrp -discrimination

Discrimination in the labour market occurs when employers make decisions on wages and employment based on prejudices, such as race, gender, religion. It can lead to variations in wages for the same job and different employment rates. Kenneth Arrow defined discrimination as: “the valuation in the market-place of personal characteristics of the worker that are …

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Which view of Phillips Curve is correct?

phillips-curve2

The original Phillips curve suggested there was a trade-off between nominal wages and unemployment. Higher demand led to rising wages and a fall in unemployment. Lower aggregate demand (AD) led to a fall in nominal wages, but a rise in unemployment. This was adapted to suggest a trade-off between unemployment and inflation. During the 1950s …

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Aggregate supply

LRAS-keynsian-classical

Aggregate supply is the total value of goods and services produced in an economy. The aggregate supply curve shows the amount of goods that can be produced at different price levels. When the economy reaches its level of full capacity (full employment – when the economy is on the production possibility frontier) the aggregate supply …

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Supply curve equation

supply-equation-elastic

The market supply curve shows the combined quantity supplied of goods at different prices. The market supply curve is the horizontal sum of all individual supply curves. Linear Supply curve A linear supply curve can be plotted using a simple equation P = a + bS a = plots the starting point of the supply …

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