1. 3.4.2: Shift in the AS Curve/ Supply Side Policies

2. Short Run AS Shift Causes (Cost of Factors) Price of Labor
Price of Inputs
Taxation and Legislation
Increase costs

3. Long Run AS Shift Influenced by changes in
Quality and Quantity of FOP
NOT influenced by factor prices
(reason for vertical LRAS)

4. Supply-Side Policy Market Oriented
Aims to reduce barriers to “clearing” like:
Govt. intervention
Labor legislation

5. Supply-Side Focus Labor Strives to create increased labor mobility
Incentives for firms to hire and labor to accept jobs
Increased quality of labor
Regulation/Union free labor market
Incentives to work through
Lower income tax rates

6. Capital Increase quantity and quality of capital Tax breaks on
Investment
Dividends
Profit

7. Competition Privatization Deregulation Encourage business start-up
Reduce barriers to trade (tariffs/regulation)