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1 Introductory concepts 2  Market mechanism  3 Elasticities  4 Market structures 5  Market failures  6  Macro economic activity/eco growth  7 Inflation 8  Employment & unemployment  9  External Stability  10  Income distribution 11.Factors affecting economy  12  Fiscal/Budgetary policy  13  Monetary Policy   14 Aggregate Supply Policies  15 The Policy Mix

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aggregate supply policies


Aggregate supply (AS) policies refer to any measure designed to reduce the costs of production and/or improve supply conditions for businesses.  This includes measures that directly reduce business costs, such as a reduction in business taxes, or measures that are designed to improve the productivity or efficiency of businesses, such as government incentives for investment in new technology.  AS policies work on the supply side of the economy and involve a shift of the AS curve.  This is in contrast to AD policies that work on the demand side of the economy and involve a shift of the AD curve.  This is highlighted in the AD/AS diagrams below:

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