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Published byВячеслав Вронский Modified over 5 years ago
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3.4.2: Shift in the AS Curve/ Supply Side Policies
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Short Run AS Shift Causes (Cost of Factors) Price of Labor
Price of Inputs Taxation and Legislation Increase costs
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Long Run AS Shift Influenced by changes in
Quality and Quantity of FOP NOT influenced by factor prices (reason for vertical LRAS)
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Supply-Side Policy Market Oriented
Aims to reduce barriers to “clearing” like: Govt. intervention Labor legislation
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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
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Capital Increase quantity and quality of capital Tax breaks on
Investment Dividends Profit
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Competition Privatization Deregulation Encourage business start-up
Reduce barriers to trade (tariffs/regulation)
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