Definition
- Market-based supply-side policy
- A market-based supply-side policy changes incentives, by cutting taxes, regulation or benefits, and leaves firms and workers to decide how resources are used.
Example
Can you think of an example of market-based supply-side policy?
Lower taxes on income and profits make work and investment pay more. Fewer rules on hiring and starting a business stop deterring firms. Less generous benefits raise the cost of staying unemployed.
Test yourself
Can you name the two types of supply-side policy?