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Hi tutor, can you explain this measure of supply side policy and how will it help supply side policy.
“Freed up markets for both factors and goods and services. This involved reducing the power of the trade unions and a reduction in the number of state-owned monopolies”
Factors = the input for production or for the supply of services.
So, if the government wanted to stimulate home ownership, it could do this in two ways:
1 Change the demand. For example, offer tax breaks for home purchase so that the process becomes cheaper and thus stimulates demand.
2 Change the supply ie change the supply side of the transaction. For example, reducing planning restrictions so that more land is available (the price should reduce) and more homes can be built more cheaply. Eliminating monopolies will bring in more suppliers, competing on what they offer, quality and price and this, again stimulates activity.