Supply-side Policies | A-Level Economics Notes

These revision notes cover everything you need to know about Supply-Side Policies for A-Level Economics. They're designed for students studying AQA A-Level Economics, Edexcel A-Level Economics, and Edexcel International A-Level Economics. Written by Jaisul Naik, UCL Economics graduate and A-Level Economics tutor since 2017.

What are supply-side policies?

Supply-side policies are a range of policies that the government can use to increase the productive potential of the economy.

The productive potential (LRAS) represents the output of the economy when all factors of production are fully employed.

Supply-side policies cause a right shift in the long-run aggregate supply curve.

This is due to an improvement in the quality or quantity of factors of production.

What is the impact of supply-side policies on macroeconomic performance?

Supply side policies cause a right shift in long-run aggregate supply curve when they are complete.

This leads to an increase in economic growth and a decrease in the price level.

This type of economic growth is known as long-run economic growth or potential growth.

In the immediate future, supply-side policies can also affect aggregate demand due to changes in government spending or taxes.