Unit 3.7·Macroeconomics

Effectiveness of Supply-side Policies

Supply-side Policies

AO3

Syllabus requirement

Evaluation of time lags, equity trade-offs, costs, political feasibility, and environmental effects. Market-based strengths include efficient allocation; interventionist policies directly support key sectors.

Assessment objectives
AO3 Synthesis and Evaluation

Summary

This topic evaluates how effective supply-side policies are at increasing an economy’s productive capacity, reducing unemployment and keeping inflation low and stable. It compares market-based measures (deregulation, privatisation, tax cuts) with interventionist measures (education, infrastructure, R&D), and explains the main strengths, constraints and time horizons that determine whether these policies achieve macroeconomic objectives.

Real-world examples for this unit